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FCA holds industry crunch talks on corporate hospitality

The FCA has been holding crunch talks with providers, distributors and trade bodies to reiterate its hardline stance about acceptable corporate hospitality under the new inducements rules.

The regulator first published a guidance consultation on inducements in September. In January, it published final guidance on “extravagant” corporate hospitality offered to advisers and allowed three months for firms to comply.

The FCA has held meetings over the past few weeks to reinforce the message that it takes a dim view of practices such as hosting advisers in corporate boxes at sporting events.

An FCA spokesman says: “We have been meeting with firms and trade bodies. Conflicts of interest have to be managed properly and hospitality received must be demonstrated to be in the best interests of consumers.”

Aegon still plans to host corporate hospitality events but says these will be for both advisers and customers. A spokeswoman says: “Our existing process is robust and seeks only to enhance the quality of service provided to UK consumers by helping advisers, our customers and other stakeholders better understand Aegon services.

“To reinforce it, we have committed that from now, our ticket allocation will be shared across all stakeholders and our hospitality allocation will be split equally between advisers and customers.”

Royal London expects the FCA to deem gifts of small value proportionate. It will continue to offer hospitality through sport sponsorships but says all events will either have to include training or improve understanding of client needs.  

A spokesman says: “We will be working quite closely with the FCA and running events on a case-by-case basis.”

Networks told Money Marketing that all hospitality received by  its advisers would have to be centrally recorded.

Threesixty director Phil Young says: “There needs to be a frank discussion about what is okay and not just a token show event to create the impression of training.”

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Comments

There are 3 comments at the moment, we would love to hear your opinion too.

  1. correlationstreet 3rd April 2014 at 10:30 am

    I can see it now. It’s half time at Twickenham in a thrilling 6N decider and the blinds in the RBS boxes go down for a training video. Now pay attention men I’m only going to say this once…….. (NB “men” includes women of course)

  2. goodness gracious 3rd April 2014 at 10:48 am

    I accept that payment to networks for stands and making training presentations to network members is totally indefensible. Networks that are restricted should welcome providers training, not making them pay for it. But business is done between firms that trust each other to provide the services needed to make the clients journey and outcome better.
    Hospitality need not be lavish, but a more informal event, often with a friendly exchange of views and needs, can provide a forum for efficiency. Need there be a formal training event incorporated? Not necessarily, but what is required is for the key contacts from the supplier to be there. Tickets to the Tennis at Queens, with lunch etc. is fine if your rep and some higher ups in the firm are present to talk to. Just free tickets, particularly to those who give large business volumes, without and involvement from the providers is probably wrong and could influence future decisions.
    If a provider who gave us hospitality and gained business due to a greater understanding of their proposition, this suited clients, then they failed to keep their promise, will not be viewed any more favourably than a firm that did not provide hospitality, apart from the fact that dialogue between parties is easier, if a little embarrassing for the provider.
    As advisers we should always remember we are working for our clients, providing sensible, tailored advice to the best of our knowledge and capability, not to get corporate jollies. Keeping this principle in mind at all times means the trust given to you from your client will not be compromised.

  3. I think it needs saying that in my view providers provide hospitality for Brand Awareness only not Bribery. For example nearly every Broker Consultant/Company has a Corporate Golf ticket. If I am taken occasionally to play golf with a BC I ALWAYS try and take them to my Club at my own expense in return.

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