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Ex-Honister IFA anger over James Hay ‘change your adviser’ letter

An ex-Honister adviser has hit out at James Hay after the firm contacted his client directly offering them the opportunity to appoint a new financial adviser.

A letter sent to a client of Allen Charlton IFA Gareth Nelson stated Honister had gone into administration. It said the client could wait for Nelson to be reauthorised or could find another adviser and included a form for clients to apply for a new adviser.

The letter says: “If you would like to appoint a new FSA authorised financial adviser please complete and return the enclosed Appointment of Financial Adviser Form. In the mean time, we will correspond with you directly and accept instructions from you directly.”

Nelson says: “We are on our knees and providers such as James Hay are going behind our backs and asking clients if they want a new financial adviser. It Is absolutely disgusting.”

Nelson added Sippcentre had contacted him to say it would be writing to his clients informing them of Honister entering administration but had refrained from doing so upon his request.

James Hay Partnership managing director Tim Sargisson says: “We are hugely sympathetic to the position that ex-Honister advisers find themselves in and we hope that the situation is quickly resolved.

“However, providers are required, and are under a duty of care, to send clients all the information they need at this time to ensure they understand our position, how we can continue to deal with these clients and to ensure that clients are not left without financial advice longer than necessary.

“The information we have sent was intended to speed up the process of enabling clients to either stay with their current adviser, once they were re-registered, or choose another adviser if they wished.”

Separately, Cofunds says it has today reinstated client account access after discussions with administrators Grant Thornton.

The platform says it had to block account access to Honister clients via the platform when removing adviser permissions, leaving clients unable to access account information.

Honister entered administration two weeks ago after failing to secure professional indemnity cover, leaving 900 advisers unable to give authorised advice.


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There are 23 comments at the moment, we would love to hear your opinion too.

  1. I really don’t see what else James Hay were meant to do. It is absolutely right that they should present this now adviser-less client with the options available to him, and getting angry with them is both petulant and pointless.

  2. What a great shame???? How desperate can people be?/

  3. Agree entirely with Scott Miller. Surely no alternative for James Hay. If an individual is not authorised how long can James Hay wait for the firm to get authorised – what if they cannot gain authorisation.
    Whose client was he anyway – Honisters or the appointed rep.?

  4. That’s what I love about our industry, so much empathy. James Hay only had to inform the client of what had happened to Honister, they had no reason to go any further and I would imagine Scott that were you in the same unfortunate position as the Honister guys you would be more than a little miffed yourself.
    This is also remarkable for being the first time in my memory that James Hay have put something in the post in a timely manner.

  5. Agree with anon. Offering another adviser was not James Hay’s call and I’m sure Scott & Ian would be the first to cry in to their P45’s if this happened to them. They might expect a tad of empathy and support from the industry.

    Just when I thought I’d seen everything in this industry…

  6. Absolutely typical of James Hay. An arrogant and unhelpful company. I arranged one of the first Commercial Union COMPS when they came out using James Hay’s hopelessly inadequate systems which made a complete mess of the application. I lost a good client because I recommended such a useless company. No apologies from Hay. Commercial Union paid compensation for time wasted but Hay insisted they had done nothing wrong.
    Barge pole territory!
    Far better options available!

  7. James Hay are nothing, PruHealth are actively contacting clients and asking if they want to deal direct.

  8. Can I please remind you that Honister ARs were only advised, via email, on Tuesday 3rd July of the situation. This was only two weeks ago. These firms have since had their income stopped, their ability to advise clients removed and the prospect of a client notation declined. The firms I have spoken with are working extremely hard to get another solution in place, whilst also communicating with clients to maintain consistency and confidence in their client relationships. May I remind Ian S, that the ADVISER owns the relationship with the client and providers should respect this. I agree there exists a duty of care to inform the client of the current situation and restrictions that are in place whilst reauthorisation is achieved. Not all Honister advisers are party to the route cause of the networks decline and thus you shouldn’t give consideration to the fact that re-authorisation will not occur. Providers should be working in conjunction with the adviser at this time, not taking this opportunity to look after themselves. Remember who introduced the client to the provider in the first place. Providers should be working with the advisers to mange the situation together, not ignoring and disrespecting and UNDERMINING the advisers relationship with the clients. Scott I feel sorry for you, having such little empathy for these advisers, I hope your nice little safe business carries on well and you do not fall foul of what has happen to 900 of your colleagues. However part of me believes from your response you probably work for James Hay and probably even sit opposite Ian S. If this is the case lads, you really should give consideration to your CVs, as they might come in handy soon, as most IFAs will be disgusted with what James Hay have done and will probably look to move business away.

  9. Empathy is all well and good, but pragmatism usually wins the day.

    The business was introduced by an AR of Honnister. From a legal perspective, I would say that an ex-AR of Honnister has no more right to be provided information on this case than I do. The ex-AR doesn’t have any connection with the case until the client reappoints him under a new regulated company.

    James Hay have acted fairly and with the client’s interest at heart. They have a responsibility to make sure the client is reassured and knows the options. They may well have suspected that this course of action would create an IFA backlash, but at the end of the day they are not going to mislead clients just to stop an IFA from getting upset.

    And just for the record, I most definitely don’t work for James Hay and I have no earthly idea who Ian S is (although thanks for agreeing nonethless).

    Best wishes to all. Scott.

  10. Is not the underlying problem here – yet again – the FSA?

    Should there be systems in place to cope with what is becoming an all too common event?

    Otherwise, they know that an adviser will be left without means of earning a living (surely some sort of “human right”?) and a client without an adviser.

    It has been asked before, but how can someone be “fit and proper” on Tuesday at 11.59pm, do nothing wrong and change nothing yet on Wednesday at 0.01am he/she is no longer “fit and proper”?

    If the FSA fixed this, there would be no problem.

  11. Scott I don’t think anyone will deny that there exists a legal obligation as you have pointed out, but the frustration comes from the manner in which it has been done. The advisers are trying to manage the situation and THEIR relationships with the clients, an element of support from certain providers would be more constructive, don’t you think?

  12. Mike O – Read the article, James Hay (according to the article) wrote to the client to say “the client could wait for Nelson to be reauthorised or could find another adviser”. There was no mention of “offering another adviser”, it was informing the client of the current position.
    The client, is first and foremost a client of James Hay, the client is not owned by a no longer authorised ADVISER. In fact, as the ADVISER is no longer authorised, it begs the question why SippCentre are not informing their clients of the same, what authority does a no longer regulated ADVISER hold? Let’s say the Honister AR actively manages the SippCentre client’s funds and the client relies upon this to protect them from volatility in the market. If anything happens before the exHonister AR can get re-authorised the client is left exposed, and all because the Provider acted/or not on the say so of a no longer regulated ADVISER.
    I am not heartless, and my current IFA is/was with Honister. I am not exposed by these events, but others may be. James Hay have acted responsibly and even provided a form to appoint Allen Charlton IFA when they get re-regulated.

  13. Anon – I find the actions of James Hay to be totally undermining to the IFA who, when all said and done, introduced the client to JH.

    The situation you describe is precisely why we need clear leadership from the regulator for cases like these. The clients and the IFA’s need protecting from both poorly managed networks and unscrupulous providers who seem ready to kick the IFA when they’re down.

    Alas, our regulator is not fit for purpose.

    I would feel deeply aggrieved if a provider did this to me should I find myself in a Honsiter-type scenario.

    I suspect you would too!

  14. Speaking as an ex sage honister AR caught up in all this, I would like to respond to the first two comments, unfortunately I think it would be censored so lets not go there, I would like to say that I have seen one of the letters from one of the companies mentioned here and they are worded purley to cause panic with the client and seem to encourage the client to act in haste and appoint a new adviser. Its very simple when you deal with a quality establishment like Transact, who wrote informing the client about de- authorisation and simply added that any queries should be directed to ‘your adviser’ – simple and what is known as ‘treating advisers fairly’- or do we not qualify for this??

  15. I can’t quite believe the insensitive, biligerent comments from fellow professionals in the industry. I am very sure that the Honsiter Practitioners are taking a very ‘pragmatic’ view of events and and very much value the whole hearted support of such views and support, this must be source of great help and comfort.

    I’m not quite sure how it can be validated that an ex-honister adviser has no rights to a client that they have introduced to a third party and worked on that relationship, these views are unhelpful, short sighted and ill informed.

  16. Larry in London 19th July 2012 at 5:58 pm

    Remember, the FSA has no interest, motivation or desire to treat anyone but themselves fairly.

    They have gathered power to the centre of their empire and they wield it ruthlessly. They thrive on power and control.

    Their claim to be ‘protecting the consumer’ by the imposition and maintenance of the most clumsy system of migrating advisers from one firm to another is laughable.

    The FSA belong in the Stone Age.

  17. I think that JH are caught between a rock and a hard place on this one.

    Anyway – shouldnt the ex-Advisers be informing their clients themselves??

  18. James Hay MD apologises for ‘heavy handed’ ex-Honister adviser letter

  19. Bruce Springsteen's guitar pick 20th July 2012 at 12:06 pm

    Whilst it may seem cathartic to lambast James Hay, ultimately I cannot help but feel that providers, including James Hay, were placed in a very difficult situation that was outside of their immediate control.

    As PensionMan says, providers were left with very little choice as to how to proceed, given the ultimate duty of care owed to their clients. Rather than criticising a provider for trying to manage a situation not of their making, perhaps greater scrutiny should be brought to bear on those responsible for creating this unfortunate set of circumstances.

  20. I think that one consistent theme running through all of these messages is that the IFA community accepts that providers do have a duty of care.

    Now please see these extract from FT Online: Tim Sargisson Stated “The FSA is quite prescriptive on its website. We are expected to write to IFA clients and explain what has happened and what their options are”.

    However when the reporter spoke directly to the FSA, their response was, The Financial Services Authority told FTAdviser there are no concrete rules governing how a provider should respond to a situation such as this, but would not comment on the Honister case specifically.

    From the above, I think it is clear that James Hay took the actions they did and are now hiding behind the FSA. However, it is now clear that the justification for their actions is founded on a lie.

    They need to accept that their actions were too heavy handed and badly managed.

  21. Very well put Bruce.

    There seems to be a section of the IFA community who are way too quick at flying into apoplectic rage at the merest hint of possible wrongdoing. I think James Hay don’t deserve some of the criticism they have received and am glad to see a number of comments that sympathise with their predicament.

    I would suggest that any ‘excess energy’ that disgruntled IFA’s have would be much better directed at Honister management.

    Best wishes, Scott.

  22. George W Jensen 21st July 2012 at 8:40 am

    Two of my peers have separately agreed that, due to behaviour of certain providers during this difficult period (one writing to ALL clients of ALL Honister ARs enclosing a 6-page list of the firms and individuals no longer “fit and proper” to conduct business) those providers will no longer benefit from any new business once the firms are re-authorised.

    Whether it has achieved the statutory objective is moot, this is heavy-handed behaviour and needlessly creates obstacles between good advisers and their clients at this already challenging time.


  23. George W Jensen – I just hope that you are not an independent financial adviser, as I do not believe that it is appropriate for your peers or anyone to discard a provider on the basis they were following what appears to be the FSA guidance. It is true, the FSA themselves are confused on the matter, but they are clear that providers should not communicate with no longer authorised firms.
    To ignore these firms, could be to disadvantage the client, and that is just not professional.

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