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Advisers accuse ‘killjoy’ regulator of double standards on inducements

Advisers say the regulator is being hypocritical and a “killjoy” after it launched a crackdown on “extravagant” hospitality in its final guidance on inducements.

The guidance, published last week, set out criteria for hospitality which is acceptable for advisers to receive from providers.

These include that the event is designed for business purposes and that payments for food and drink are proportionate and any overnight accommodation only paid for where necessary.

The FCA is concerned that hospitality is creating inducements to sell products and undermining the RDR.

Thameside Financial Planning director Tom Kean says: “Corporate jollies are an important part of relationship building and are allowed in other professions. The regulator is being a killjoy.”

But Paladin Financial Services managing director Tim Purdon says: “This does not affect us. No doubt some advisers will be very disappointed to lose their nice perks but I have no sympathy for them.”

Yet Purdon believes the FCA will have to look at its own actions in order to police the rules properly.

He says: “It may be difficult for regulators to use their own judgement if they think £500 a night is reasonable.”

The FCA recently spent almost £15,000 on a board 48 hour “away day” at a five star hotel at a cost of £500 per head.

Plan Money director Peter Chadborn says: “If advisers keep a new business register and a record of the hospitality events they attend, they should be able to prove they are not influenced by marketing spend.”

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Comments

There are 5 comments at the moment, we would love to hear your opinion too.

  1. The Hound of the Compliancevilles! 24th January 2014 at 10:57 am

    I’ll be the unpopular one to start the debate off:

    I’m not sure there are double standards – to imply that there would need to be an alignment of the two entities in relation to their business.

    One is the Regulator, the other is the Regulated.
    One regulates the Financial Services industry (including advisers) and the other doesn’t. The other is the front line, customer facing, entity whose conduct needs to be brought into check to ensure better outcomes for the general public when getting financial advice.

    Therefore whilst the guidance provided may be “smarting” for some advisers its not really a direct comparison of hypocrisy is it????

    And if it was -the test comes down to what is reasonable and proportionate given any circumstances???

    I’m sure this will start the ball rolling this morning…..

    Happy weekend all.

  2. The FCA’s hypocrisy is incredible.

    Nero fiddling comes to mind. they are so busy worrying that advisers might get the odd free lunch they completely miss the big issues where clients loose real money…Keydata, Arch Cru, the banks etc.

  3. @ Hound
    We meet again!

    The regulator is profligate with our money in funding its own jollies. But focusing time and effort worrying about the odd free lunch (which will make zero difference to decent advisers) while there are so many other BIG ISSUES they should put the resource into.

    It shows a mind boggling lack of leadership priorities…

  4. I agree with Simon.

    The regulators seems to be obsessed that advisers don’t show enough independence when choosing a product provider and are unduly influenced by ‘inducements’ and (before RDR) commission despite the fact that they have no evidence to suggest that is even a small problem. The regulators own review showed no commission bias issues and now they have a bee in their bonnet about inducements. No one is suggesting that advisers should be taken on all expenses trips away in return for providing business but ‘thank you’s’ are perfectly fine. I know that i am not influenced by inducements and i don’t know of any self respecting adviser that is.

    All the above is my humble opinion only.

  5. To the regulator, any such criticisms are just water of a duck’s back. It can spend our money in any way it pleases and is answerable to no one.

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