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Emma Simon: FCA must clamp down on financial ‘introducers’


When is an adviser not an adviser? When he is an “introducer”. 

It sounds like a bad joke but it is no laughing matter for the consumers who find themselves targeted by such firms.

In a recent case highlighted to me, a low-paid worker received a call offering her a pension review. When she agreed, this was followed by a home visit involving a three-hour presentation about investing in hotels in Cape Verde. At the end, she signed paperwork to set up her own company with a self-administered pension plan, into which she planned to transfer 75 per cent of her existing pension, valued at about £60,000. Aside from her home and a modest Isa portfolio, this was her entire wealth.

What is most shocking about this case is that the person who visited her and the companies involved do not appear to have broken any rules. This is because they are “introducers’’, not advisers, and as such are outside the FCA’s remit. 

Such firms say they make it clear that they are not giving regulated financial advice. This means they do not have to check whether the investments they are “introducing” are suitable for that particular customer. They are simply giving information, while possibly facilitating the quite complex process needed for ordinary consumers to invest in such schemes. But just to stress, this is all totally legal and above board.

I find this an unsatisfactory state of affairs. These introducers might couch their sales pitch carefully but the customer I spoke to came away with the impression that this was a recommendation and one she would be foolish to miss.

The introducer completed an extensive financial audit, giving the customer up-to-date valuations of her savings, pensions, mortgage and income. It is perhaps not surprising that she thought the investment then discussed was relevant to her circumstances.

If I were a financial adviser, I would be hopping mad about such practices. In the past year, the FCA  has taken steps to stop advisers even mentioning the words “unregulated assets” in case this is inadvertently taken as a recommendation to buy. It has also made a concerted effort to clamp down on dubious pension-unlocking firms.

I fully support these moves. But I wonder whether some of these firms have reinvented themselves as “introducers”.

I have no idea how widespread this practice is and would like to hear from anyone whose clients have been similarly approached. 

Warning people to deal only with authorised advisers is not sufficient. The FCA must tighten the rules to make it far harder for these “introductory” firms to flourish.

Emma Simon is a freelance journalist



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There are 9 comments at the moment, we would love to hear your opinion too.

  1. They also allow a service providing information to use the term advice in its name.

    Joking aside isn’t this what comparison websites have been doing for years?

    However surely the fact that she was offered a pension review should mean that it comes under the remit of advice?

  2. Emma

    I think you have missed another point. To the best of my knowledge there are members of networks who didn’t pass their exams who are running around flogging life policies and introducing to other network membbers for investments and pensions. I just wonder where the line is drawn?

  3. The Hound of the Compliancevilles! 11th March 2014 at 9:03 am

    I have some sympathy with the plight of the regulator on this one. The regulator works on the basis of FSMA, which sets the regulatory perimeter, and for one reason or another introducers fall outside that perimeter, hence limited powers by the FCA to do anything, the FCA cannot “tighten rules” (as suggested above) where it is legally not empowered to create them.

    What is needed is a change to FSMA and the perimeter to allow the FCA the ability to legislate.

  4. Bang on the money Emma !!!

    There is also another scenario -: adviser who couldn’t or couldn’t be bothered to pass the exams who now work as “introducer’s” for other firms or practices, still out there looking after and advising their existing clients not just any new ones ?

    The point is; we knew this would happen the regulator also knew this would happen and it will continue, I think the few that do get found out will be nothing in comparison to the many still out there !!!

  5. The damage that these kind of practices do to the reputation and perception of genuine financial advisers is horrific. I remember the regulator at saying something along the lines of “if a client thinks it’s advice then it probably is”. How these kinds of activities are allowed to fall outside of the remit of the FCA is beyond me.

    The FCA’s remit should be the ongoing protection of the public against bad practices within financial services. In no sane persons opinion can an ‘introducer’ fall outside of the financial services sector.

  6. Spot on and it needs to be stopped I like many have been going on about this for years !!!!!!!!

    I even have emails from the unauthorised business team stating that on-line marketing companies are exempt under the FSMA 2000 & 2012 due to journalistic exemptions.

    This in my opinion and 20 years’ experience is incorrect and makes a mockery of the reasons why you should hold authorisation in the first place.

    We can bang on about the rights and wrongs of RDR but unless we support the viewpoint that giving financial advice you need to be authorised and regulated, then what is the point of regulation and in that fact the FCA.

    It seems pointless to me having strict rules for independent financial advisers and allowing the other half of the industry to do pretty much what it wants without any regulation at all.

    This is a subject that all financial advisers need to get behind well done Emma for raising it and for Money Marketing for printing it.

    Maybe we can have a response from Martin Wheatley as a suspect there are similar concerns from every single adviser and it would be nice for once for the FCA to recognise the importance of authorised and regulated advisers.

    More importantly it would be nice for them to actually carry out their statutory objective PROTECT THE CONSUMER!

  7. Emma please try and take this further as I’m sure you will have the backing of every qualified financial adviser in the country. When the proverbial hits the fan then we will all be classed as giving this non nonsensical “advice”. I for one would gladly sign a petition for this. These products should be SUPER REGULATED not UNREGULATED.

  8. Thankyou for the replies to this. I can appreciate it’s not easy for the regulator – but this doesn’t mean they shouldn’t try. Yes agree in particular with the comments about this being Super Regulated not unregulated. Interested as ever to hear any examples you come across.

  9. As previously mentioned I think there is little the regulator can do about this (apart from raising awareness maybe). Much of what we consider to be UK regulation is set by Europe with little wriggle room available to the FCA. The problem being that in Europe, introducing is the main way of selling and advising – there are literally thousands of companies who are structured purely to introduce, if you’ve ever entertained advising outside these shores you will have very likely come across them

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