CompaniesDec 10 2015

Sesame under fire after review loses adviser clients

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Sesame under fire after review loses adviser clients

The managing director of advisory firm Vobis Limited has complained the Sesame network’s Project Minerva review has gone against his advice and switched a client who wanted active management into a stakeholder scheme.

Speaking to FTAdviser, Marc Hackney explained his client was looking to switch his £500,000 worth of assets into an actively-managed self-invested personal pension.

After running through the calculations, he agreed to make the switch, but his network’s review instead stated the money should be moved into a discounted stakeholder pension plan.

“I just don’t understand their reasoning, it appears they have assumed growth at the same rate as the active management we recommended and then worked out compensation on the difference in fees,” he commented.

“We can never get a hold of the methodology they use and question how they come to their conclusions.”

In response to the adviser’s complaint, Sesame stated it has a policy of not commenting on individual cases but is committed to working closely with firms to try to resolve any issues or concerns raised.

A spokesman said: “Our pension past business review, which is being conducted by a specialist independent and FCA-approved company, continues to follow a rigorous process and methodology that has been agreed with the regulator.

“Our focus throughout this exercise is to ensure that any potential consumer detriment is addressed.”

It was late last year that Sesame announced it was undertaking a past business review, following regulatory fines for failing to ensure advice was suitable and having inadequate systems and controls to provide proper oversight of its appointed representatives.

Named Project Minerva, the review focussed on pension switching advice and is run by Deloitte, along with The Consulting Consortium.

The first stage saw Sesame write to clients asking them if they want to opt-in to a full review of advice deemed unsuitable.

As part of this, appointed representatives were told they would have to pay the excess on Sesame’s professional indemnity insurance and in some instances even cough up for full redress.

The second stage is an investigation into whether clients, who are paying their adviser a fee for ongoing service, are actually receiving this.

Following news at the end of March that it was to close the investment side of its network, Sesame said it was not seeking to recover any PI excess amounts arising from any claims up to 30 April 2015 for those sticking with Sesame in a non-retail investment advice capacity, going direct through Bankhall, or joining ‘preferred partner’ Intrinsic.

“This applies to all pensions and investment cases including Minerva, our pension past business review. This agreement not to recover PI excess will remain in place whilst you remain with Bankhall, Sesame or Intrinsic,” read a note to members.

Mr Hackney said it seems unfair that while the review is as a result of Sesame’s failings, “the letters to clients make it out like it’s all the firms’ fault and we’re losing clients as a result”.