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Charging fees will not help lower-paid get advice

To: David Severn

Head of department, conduct of business

Financial Services Authority

I have been an IFA for nearly 15 years and was previously a branch

manager of Lloyds Bank. I have had my own business for nine years.

There are a number of questions which I think have been shown up from

the review but one of them seems to be that genuine independent

advice has not been available to low-paid people.

I cannot see how presenting such a person with a fee agreement the

moment they walk through the door is going to be conducive to their

taking up our services.

I have numerous so-called “working-class” clients, most of whom find

my advice invaluable and all of it has been free, except when they

have bought a product. Only one in four of the times one sees people

leads to a sale.

There are a number of other matters which I feel have not been

addressed at all. For example, there has been talk of commission

bias, particularly in bonds. If only the N11 day had been kept to,

when it was suggested some years ago that commission on bonds should

come down to the same as unit trusts over a period, namely,3 per cent

plus 0.5 per cent renewal. That would have done away with that

problem and yet it was quietly dropped.

Sometimes I have recommended a term policy and, even though the banks

are more expensive, people have felt they have to go back to the bank

and sometimes have had their arms twisted that they will not get a


I do feel that much of what you have suggested will push people

straight into the arms of the banks, who are generally uncompetitive

and certainly will not go in for pro bono business.

I have recently been dealing with a couple where the husband has

cerebral palsy and the wife severe rheumatoid arthritis and, although

he holds down a job, will not be able to work much longer. He has

been told by the Benefits Agency they could not tell him how much he

would be entitled to and the Citizens&#39 Advice Bureau was equally

unhelpful, saying he would be “all right”. I have taken up the

cudgels on behalf of this working-class couple. I am doing all this

work on a pro bono basis, which the banks certainly do not. This is

typical of many IFAs. If I had to present them with a fee agreement

to begin with, how on Earth would they pay it?

I should also mention I work for the Consumers&#39 Association and the

Chartered Insurance Institute, setting exams for the latter. This is

something which many IFAs do. The CII does not pay particularly well

and it costs me money to be away from the office.

Another thing that is suggested is that we do not recommend National

Savings. This is rubbish because the National Savings Organisation

has a special IFA helpline, which is often engaged. They also supply

me with special literature, application forms and so on as they come


I once dealt with a working-class couple for four years without

earning anything and then, when one of their friends was left some

money, they came to me because they knew I would not force them to

buy something they did not want.

That is the nature of the business and it is obvious that the big

banks have undue influence and will continue to do so. What a pity it

is that you have not been out on the road with an independent

financial adviser to find out what we do. You would have seen that we

spend 90 per cent of our time advising or doing admin and probably 10

per cent selling.

In fact, when I went to see a new company case yesterday, he

admonished me for not being “salesy” enough.

I shall be very pleased to hear what you have to say about these

comments, which I feel are relevant. I can only see that what you

have recommended will drive people into the hands of the banks and

that there will be less independent advice.

It also seems to me peculiar that IFAs will have to have a fee

agreement and then comply with it on a commission basis and yet

multi-ties will be allowed to draw commission in the ordinary way,

presumably even without full disclosure as we have now.

I might add that I have every intention, if I possibly can, of

remaining an indepen-dent financial adviser, as I bel-ieve very

strongly in the concept and, I am pleased to say, so do my clients or

I would not be acquiring new ones very rapidly.

B G W Jamieson


Jamieson Financial Management,

Bognor Regis, West Sussex


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