Britain's IFAs are losing nearly £4m a week and wasting more than an hour a day because of shoddy administration by product providers.
IFAs, whose estimated pre-tax average earnings are £35 an hour, are losing almost 15 per cent of their income every day because incompetent back office staff are bungling the administration of so many policies.
Figures from the FSA reveal product providers are making administrative bungles in 0.5 per cent of all new business cases and while hte average error rate in policy serving is a colossal 15 per cent.
Kangley Financial Planning managing director Geoff Kangley says the situation has become so bad that more than 15 per cent of his annual turnover comes from compensation paid by life companies.
Lautro rules 2 and 3 allow IFAs to claim for compensation if they believe a company has been negligent.
The level of incompetence has reached such levels that the FSA has been forced to introduce tougher standards for back office employees in a bid to stamp out maladministration.
The regulator's Training and Competency consultation paper is aiming to create aining regimes for back office supervisers, to slash the time IFAs spend chasing product providers' errors.
A 50 per cent reduction in the error rate would see the estimated 22,000 practicing IFAs scoop an additional £1,200 each a year.
They would also have an gain an extra 650 hours in their working year.
Kangley says: “If you average it out more than 15 per cent of our turnover comes from compensation. No less than 20 per cent of my working week is spent doing the job of people who I have given my business to.”
LIA public affairs director John Ellis says: “The FSA paper is long overdue. For years our members have been complaining about poor administration.”
FSA head of industry training David Jackman says: “Training should not slide down a firm's agenda. This includes training in the back office where new standards for life and pensions providers aim to address administration problems.”
But ABI press officer Suzanne Moore says: “Companies are continually seeking to improve their performance but with such amounts of business its inevitable administrative errors will be made.”