FCA should speak to clients on DB transfers
Regarding the Financial Conduct Authority’s consultation on banning contingent charging (July 30): I believe we are past the stage where a file can tell an accurate story regarding the suitability of the advice.
Also the regulator will be going in with a biased view, as it is already of the opinion that the transfer should not be taking place.
They really need to be sitting down with the clients who they believe have been “badly advised” and getting feedback on their views.
They do not need to stray into advice territory as it is just challenging the advice and the consumer views.
After all, it is the client’s own money, and right or wrong, they have a view on what they want to do and why.
They will then see the challenges ahead. Most defined benefit cases are initiated by the clients.
In the majority of cases they are starting from a point where they want to transfer.
Also, never in a million years will advisers risk giving DB advice for a £3,500 flat fee. It would be financial suicide.
The slightest whiff of a complaint and your professional indemnity insurer will advise you to pay up, rather than chance the case going to the Financial Ombudsman Service.
You also have to insure the advice for the rest of the client’s life. In just a few years you would be making losses.
As long as the levy, PI insurance and FCA fees are charged as a percentage based on turnover, then clients will also have to be charged in the same way, otherwise you will be faced with having to wind up your company, when the cost of staying in business outweighs any advantages. And we all know what happens then.
Tommy Frodsham, Tailored Financial Planning
Set your own boundaries
Recording transactions as execution-only for existing clients is probably more common than it may seem (putting the unregulated investment issue aside).
Advisers are put in a difficult position, that is, they could potentially lose the client by not acting upon instructions or facilitating what they want, so these transactions are then processed as execution-only.
Part of the issue here is advisers not understanding their roles and positioning this well with clients, that is, what they will and will not do should be made clear at outset.
When transactions are carried out without advice then this should be documented accordingly, including a letter to the client.
Advisers want the FCA to define boundaries when in fact it should be the businesses themselves that should set policy based on guidance already available.
Name and address supplied
Look at the positives of contingent charging
While I can appreciate the concerns of the FCA, the Work and Pension Committee and Frank Field about contingent charging, I feel too much emphasis is being placed on a ban and not enough on robust governance to mitigate the risk of poor advice due to “fee considerations’’.
I believe there are advantages to contingent charging as well as the more widely talked about and reported disadvantages, for example, wider availability of advice to the consumer.
Surely, therefore, it would be better for the FCA to concentrate on adequate management of conflicts of interest rather than shrink the DB advice market through a complete ban?
One example is where the decision to transfer is taken away from the adviser and is made by a pension transfer specialist that checks the case.
The PTS would not in any way be rewarded for volumes of business completed and would not be targeted for any level of recommendations to proceed.
Furthermore, the number that have signed up to the Pension Transfer Gold Standard is a demonstration of the general desire to keep standards high.
I am therefore asking for more reasoned consideration and consultation (which I believe is the approach taken by the FCA in consulting until October).
In my view, it is not helpful when some people and commentators label all advisers as ‘“sharks’’ who are out to make as much money as possible.
In my experience most advisers I speak with really do try hard to get their advice right to ensure a good outcome for the client and consequently a good and continuing relationship.
Kevin Davies, NFU Mutual
Mandatory cost disclosures
While costs are not the only factor that determines whether a pensions saver gets good value for money or not, theyare a very significant factor (August 5).
On that basis, we wholeheartedly welcome the first class analysis and report by the WPC, which calls for exactly the kind of effective cost disclosure framework that will empower pension savers and those that represent their interests to shop wisely.
To my mind, the single most important recommendation the WPC is making is to replace the idea of a voluntary cost disclosure framework with a mandatory one.
This must make sense because there are many advantages in creating a level playing field; everybody that likes free markets should see that.
Leaving it to individual companies to decide whether to disclose costs properly or not is as daft as the idea of leaving it entirely to the discretion of car drivers to stick to the speed limits, or not.
We do not want carnage on our roads and we do not want mass pensioner poverty either.
Andy Agathangelou, Transparency Task Force
