Partner House Financial Services partner Richard Davis says he has six clients, formerly with Barclays and all approaching or in-retirement, who were advised to cash in their investments and transfer their Isas into the same single unit trust- the Aviva (formerly Morley) balanced global income fund.
The fact these clients saw different Barclays advisers suggests they may not be isolated cases. Since printing the story Money Marketing has received several more complaints from advisers regarding clients in a similar situation.
The evidence raises question marks over Barclays’ defence of its “best of breed” multi-tie model it has claimed rivals independent advice. It also goes to the heart of some of the dilemmas the FSA is grappling with as it finalises the Retail Distribution Review and tries to ensure clarity of service to the consumer.
A couple of years ago, on-board PIMS, a sales director at Barclays Financial Planning boasted to me that the firm was drawing up plans to dominate the IFA marketplace and that Barclays was “coming” for IFAs clients.
At the time, late June 2007, he said the 900 or so Barclays advisers were about to embark on a new training programme aimed at improving TCF standards and replicating the service offered by IFAs. If the advice we have seen in these particular cases is anything to go by the training was not too successful.
Speaking to advisers in one of the bars onboard later that evening the sentiments were laughed out of town, familiar statements of intend that had been heard again and again throughout the years. But the laughter was tainted with a certain anger that the firm thought it could simply come along and take significant IFA market share without being the true agent of the client.
Move forward in time to last November’s RDR paper, where the FSA rolled back from its original intention of creating a sharp distinction between advice and sales and instead will investigate a “sales advice” type channel.
The FSA’s work is now focused around how best to differentiate this channel from truly independent advice and make clear to consumers the difference between the services.
The trouble is this is far easier said than done with Barclays being a prime example. The name Barclays Financial Planning associates the firm with the top end of the IFA market with its website promising “the best financial planning service available”. I’m sure more than a few Institute of Financial Planning members would have something to say about that statement.
The Barclays sales director on board PIMS was also at great pains to stress the firm was looking at training all its staff to certified or chartered level as part of this focus on training. The implication was that if advisers are trained up to that standard it does not matter that they are not operating on a whole of market basis.
The FSA’s November paper suggested that anyone operating under the sales advice (or whatever it will be called) banner will have to be trained up to the same standards as IFAs. This is a welcome move but it does not mean the FSA should take its eye off the ball with regards ensuring clarity of service offered to the consumer.
The FSA’s research into Critical Illness Cover, published yesterday , again highlights the regulator’s dilemma. It found around 70 per cent of people who bought a product through a direct channel thought they were given advice. The FSA has warned over this “grey area” over what constitutes an advised sale.
If this is causing confusion how hard will it be to ensure clarity between sales advice and whole of market advice, especially if certain firms will be doing their best to piggy-back on the good name of IFAs without having to bear all the responsibility?
The issue of clarity of service has been an albatross around the FSA’s neck since its botched depolarisation plans. What should it do? Return to its plans for a strict advice/sales split? Can a sales advice channel work and how should it be labelled? Let me know your thoughts below.