One of the most interesting findings from the Financial Conduct Authority’s financial lives survey was to compare the number of people who had been contacted by a potential scammer with those who used a financial adviser.
The survey, published last year, revealed 6 per cent of adults used the services of an adviser in the preceding 12 months, while 23 per cent experienced an unsolicited approach about pensions or investments that may have been a scam.
Perhaps it is no wonder people are cynical or jaded about the financial services industry given they are nearly four times more likely to have encountered a potential scammer than an adviser.
Recently, there have been concerns that the new rules surrounding claims management companies will hinder advisers in their ability to help clients claim back money from the Financial Ombudsman Service or the Financial Services Compensation Scheme.
Advisers should welcome these new rules because they will potentially reduce the amount they pay towards the FSCS.
But the side effect is that it prevents advisers from effectively acting as CMCs unless they take on the new permissions – and potentially increases their insurance and regulatory bills.
The rules state that if a firm carries out a regulated activity they will need to get permission, unless they are exempt. These activities now include seeking out, referring, advising and representing clients with their claims, including claims made to the FSCS.
Helping clients with a claim is no doubt useful, but it is acting after the horse has bolted. By this point, clients may already have been scammed.
It is better to get to these people early and schemes like the Personal Finance Society’s Moneyplan service, which sees advisers work with Citizens Advice to provide pro-bono guidance, are a good example of what can be done.