Your Shout: Letters to the editor

Financial Adviser Letters

Financial Adviser Letters

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’’.