Opinion  

Letters: Industry is charged ever-increasing fees because of fraudulent misrepresentation

Financial Adviser Letters

Financial Adviser Letters

Scott Gallacher

Rowley Turton

 

System overhaul

Following your article ‘Treasury confirms FSCS levy talks as MPs raise concerns’ (Nov 6). 

The only reason the advice industry is charged ever-increasing fees is because of fraudulent misrepresentation by some advisers. 

The way the system is set up and regulated allows bad advisers to lie to clients to invest in products that are very high risk and fail, put their businesses into voluntary liquidation with insolvency practitioners who can’t understand what really happened and set up other companies to transfer operations so it doesn’t look like phoenixing and the claims go to the Financial Services Compensation Scheme. 

There are ways to stop this:

• Make it a criminal offence where advisers lie to clients to generate huge fees.

• Make it mandatory for individual advisers to have PII.

• Train insolvency practitioners to understand how advisers cheat the system and submit reports to both secretary of state and FCA on outcome of investigation.

• Finally, provide funds to support such investigations.

Name and address supplied

 

Property troubles

Regarding your article ‘CMA cracks down on developers over leaseholds’ (Sep 4).

Some months ago during a house viewing on a new development, we asked if the house was leasehold or freehold and what charges were payable. 

The estate agent told us the only charges payable were for maintenance such as the gardens and that there was no ground rent because the house was sold as freehold.

After selling our home and submitting the application we visited the site office to sign their ‘conversion’ paperwork, which stated the house was leasehold for 999 years. 

We explained we were told the house was freehold by the estate agent working for the developer and this was why we put our house on the market to reserve one of their homes.

But the estate agent denied the conversation. 

The developer would not sell the house to us as freehold unless we paid them £9,885 (15 times the annual ground rent) for the freehold, otherwise the house would be on a leasehold basis with annual ground rent of £659 plus £89.50 annual service charge.

If we chose to buy the freehold at a later date it would increase to 30 times the ground rent.

After lodging a complaint, the developer denied they misled us, but agreed to reduce the freehold purchase price to £4,500. 

They said if neither party could agree they would put the house on the market that evening – so basically strong armed us into paying for the freehold.

Danica de Mello