FCA transparency guru backs contingent charging ban

Investment charge campaigner Chris Sier

Investment fees campaigner Chris Sier says he is backing a ban on contingent charging.

His comments follow calls by work and pensions select committee chair Frank Field MP for the practice, where adviser charges vary based on whether a particular recommendation is given, to be prohibited.

In an interview with Money Marketing, Sier notes the issue of contingent charging is complex but that on balance it should be banned.

The committee first called for ban in February 2018 in a report examining how financial regulators have dealt with the British Steel pension saga.

In January MPs launched an inquiry into the way financial advice fees are levied for DB transfers, and in May reiterated its calls for action on contingent charging.

Sier is a well-known transparency campaigner who led the FCA’s working group on the disclosure of costs and charges for institutional investors.

Last summer the group released its recommendations, including suggesting five fee disclosure templates.

Sier is currently chairman at technology platform ClearGlass that has grown out of FCA’s working group and aims to keep pressure on the asset management industry to disclose charges.

On the call to ban contingent charging Sier says: “Financial advisers used to earn through the backdoor via contingent charging but it never hit the consumers’ attention span. As soon as RDR came in the client was forced to pay an upfront fee.

“The trade-off is you get independence and remove backdoor charging, but you have to pay up front. That can be a problem for some people because how do they pay for that?

“Human behaviour is such that individuals do not want to pay up front and putting your hand into your pocket to pay for thousands of pounds of advice is complicated.

“Banning contingent charging won’t be a panacea but I am in favour of what Field is saying as transparency is the most important thing. The flip side of transparency is honesty, and this is uncomfortable.

“There are some uncomfortable things about honesty like you have to pay upfront but at least the market is open, honest and I am all for it.”



How to demonstrate DB transfer suitability

With regulatory pressure growing, advice firms need to remain vigilant It is the most complex and high-risk financial advice you can give, and it can result in serious and irreversible consequences for clients. So it is no wonder the bar is set so high for advisers to demonstrate the suitability of any recommendation to transfer […]


IFAs gun shy of DB transfers due to FCA rules research shows 

Seven out of 10 advisers say complex FCA rules are making them think twice about giving advice on DB transfers Aegon research shows.   In October 2018 the FCA published its final rules on how it expects advisers to handle DB transfers such as providing a suitability report for a client regardless of outcome.   The study shows 69 per cent of advisers […]


Is now the time for a DB transfer turnaround?

Falling transfer flows, regulatory jitters and fears over insistent clients are reshaping the Sipp market, our survey reveals Sipp providers have tightened up their defined benefit transfer processes, a Money Marketing survey suggests, and are turning away some business as consumer appetite also cools. Data suggests that DB transfers have started to die down from […]

TPR ratchets up pressure on default investment governance

The Pensions Regulator is scrutinising scheme trustees more in a drive to ensure they are meeting their legal obligations and properly governing default arrangements. The watchdog has contacted trustees of hundreds of schemes and asked them to confirm that they have reviewed their default arrangements. The move is part of TPR’s ongoing work to protect […]


Stumped by social media?

By Scott Mill, Digital Marketing Consultant In an age of seemingly endless distractions, getting the attention of your audience can seem daunting. The challenges faced are already being addressed by other industries and it occurred to me that we could learn a few things from the game of cricket. Play the short game Test cricket […]


News and expert analysis straight to your inbox

Sign up


There are 8 comments at the moment, we would love to hear your opinion too.

  1. Yet another clown with an ill-informed opinion. The RDR has caused massive detriment to the consumer and charging from the outset will deter many from seeking advice. Is he yet another to set up a business from a previously employed position with the FCA and now self-publicises via consumer protectionist articles.
    Make a difference and become an IFA to address the advice gap left by the RDR or be quiet!

  2. How does a transparency guru get paid?

  3. Hi have no problem with banning contingency charging as long as the powers that be understand fully the consequences.

    In most areas of advice this would work. However it would mean many could not afford the up front fees.

    How many advisers have consumers approaching them to sign to take secured benefits pensions? You than get called everything under the sun when you will not sign, with the consumer screaming, its their money and without your signature they will not give it to me.

    I find it unbelievable that the FOS does not charge any consumer for handling a complaint. We are told this cost, any cost might prohibit the poorer in society from making a complaint. Even if it is clear they are committing fraud the consumer gets away Scott free.

    It would appear the main drive is to make sure that only those with the ability to pay upfront gain financial advice.

    Most adviser will not have a problem with this, but I would suggest the FCA might, as it will clearly take advice out of the reach of 80% of the population.

    To many are looking at this from the wrong perspective, its not what you charge, how you charge, its about the advice and was it correct.

    • Julian Stevens 20th June 2019 at 6:23 pm

      But the principle issue is the undeniable conflict of interest posed by contingent charging. An irrefutable body of evidence exists which proves that a proportion of the adviser community does not manage as well as others.

      Apart from that, anyone who is either unable or unwilling to pay a fee upfront for scrupulously impartial advice almost certainly isn’t a suitable candidate for transferring.

      Instead of sitting on the fence, the FCA should make clear its position on CC.

      • David Bashforth 21st June 2019 at 11:39 am

        The conflict exists even ignoring upfront advice fees because the far more valuable income is the ongoing fee income for 30 years plus possibly. An issue nobody is talking about. There is also an inherent conflict in being paid for advice on DB non contingently as there is clearly a benefit to advisory businesses to advise retain i.e lower PI premium, lower risk of future complaints. Impartially comes from within a firm’s behaviour culture and ethics.

  4. David Bashforth 20th June 2019 at 11:21 pm

    The argument against contingent charging is absurd. We see this a a way to empower clients who therefore have the right to walk away from the advice process at any time without charge. We chose to bear that risk as a business because it means that the first meeting becomes entirely focussed on the clients needs and objectives, in an environment where they do not feel like they are “on the clock”. It allows us to demonstrate our expertise and demonstrate our value by the application of evidence and process.

    The current arguments also seem to be entirely focussed on the upfront / initial advice charges, ignoring ongoing adviser charges altogether. It is erroneous to suggest that ongoing charges are not ” contingent” as of course they are, only being received if a client goes on to have assets managed by an adviser. Clearly this is very relevant to DB transfer as ongoing charges will soon eclipse any initial fee income. Should ongoing adviser charges be banned too? Why stop there, why not ban fund manager charges and wrap charges as well!

    It’s bad advice and advisers that need rooting out and banning, not charging models.

  5. I don’t get this whole argument …

    Look at it from a clients perspective….

    OK, you have recommended a particular course of action, and you are charging me wether I do it or not ! ..well I better do it, I have to have something to show for my money !

    The end result is the same, who wants to pay to disagree ?….its like some monty python sketch …

Leave a comment


Why register with Money Marketing ?

Providing trusted insight for professional advisers. Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

News & analysis delivered directly to your inbox
Register today to receive our range of news alerts including daily and weekly briefings

Money Marketing Events
Be the first to hear about our industry leading conferences, awards, roundtables and more.

Research and insight
Take part in and see the results of Money Marketing's flagship investigations into industry trends.

Have your say
Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

Register now

Having problems?

Contact us on +44 (0)20 7292 3712

Lines are open Monday to Friday 9:00am -5.00pm

Email: customerservices@moneymarketing.com