More checks could bring down fees

‘Uh oh, what have I written?’ is usually my first thought.

But last week when I began to look at the stream of messages it was the continuation of a discussion among financial advisers that had lasted a day, and then had blazed through the night. Do you lot never sleep?

And it has highlighted the mess that everyone is in over pension transfers.

The letter was so odd that I actually thought it was a scam to begin with

So let’s thank chartered financial planner Gianpaolo Martini of Higgins Fairbairn Advisory for raising it when he put out a letter from Standard Life that had asked him to supply reams of information about a transfer to Fundamental Pensions.

Standard Life wanted copies of glossy brochures, key features documents, terms and conditions, details of fees, commissions, trustee charges, in fact, anything that related to the transfer. It also wanted to chat to Mr Martini for up to 30 minutes about the transfer. 

In his Tweet he described the request as “a new low... to prevent outflows”. 

I have to say, the letter was so odd that I actually thought it was a scam to begin with – which further just highlights how perilous this field is at the moment.

Anyway, I retweeted the message and posed the question about whether this was just Standard Life being responsible. Oh how the floodgates opened.

What was an interesting added detail [as clarified by Financial Adviser reporter Amy Austin in her article on the subject on September 14] was that this particular transfer was happening through Origo and all parties were fully regulated.

Firstly, let’s begin by saying that much as how I am usually the first to criticise insurers for being greedy, at worst this is just Standard Life being over zealous.

The guidance on pension transfers inside insurers is getting stricter every day, the legal teams more worried, the restrictions greater. This could have even be a random check, nonetheless a heavy-handed one.

Financial advisers do not like being preached to – and Standard Life’s tone was perhaps too hectoring.

The added check would have inevitably led to a further delay for the client when pension transfers, even those through Origo, can be slow-going because of the intransigence of some involved.

But you have to look at it from the other side too, from the perspective of the worst case scenario. We are in a world where, sadly, too many transfers have been allowed through unchecked and where some regulated advisers have behaved appallingly.

The current devastating hikes in professional indemnity cover and Financial Services Compensation Scheme levies are because of this.

You can not have it both ways, I’m afraid.

The legal risk of allowing a transfer that turns sour has become too great.

One way to get that levy down and reduce PI bills is to make the system more rigorous, to demand more routine queries and even random checks (which I suspect this is).

Advisers may not like it, and clients may not like the delay, but it does create a safer world.

The other issue is whether insurers could handle this better – and undoubtedly there is a case there.

Pension companies need advisers, and they would do well to remember that for the market to work properly they have to operate as a team, not adversaries.

Good advisers are currently paying the real financial price of poor pension transfers through hikes in fees, but the only way to alleviate this is by paying a different price – through more checks.

Mr Martini, who I thank for raising this important issue, is right: insurers do not know best on this issue.

But neither do advisers, so both sides would do well to remember that to create a better market.

Mortgage mess

What a mess the mortgage world is in as the big names have all but withdrawn from the low deposit end of the market.

But in trying to manage demand they are coming up with all kinds of ludicrous restrictions to limit demand, and on top of that, holding fire sales.

It is a headache from brokers trying to do the best by their clients, and worse still creates jeopardy and potentially bad decision-making from first-time buyers.

That is a risk to the proper functioning of the market.

Upfront fees

Well, I never. A price war for the high-end wealth managers as Coutts axes upfront charges for regular investments.

Death to these horrible and destructive charges.

The sooner the industry moves away from upfront fees for the merest investment, the fairer the industry will be for consumers.

James Coney is money editor of The Times and The Sunday Times