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Fidelity slammed over ‘direct discount’ offer to adviser’s clients

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Fidelity has been slammed for a “catalogue of failures” after it wrote to a former Honister Capital adviser’s clients offering a “loyalty bonus” of up to 0.25 per cent to switch to its direct service.

Following Honister’s collapse last July, Fidelity sent mailings to clients of former Honister appointed representatives it believed had not been reauthorised offering discounts on its execution-only services. Some 5,000 clients moved to the service following the mailings, equivalent to 25 per cent of Honister clients.

By January this year, only 3 per cent of Honister advisers had not been re-authorised.

In January, Fidelity wrote to 45 clients of Leicestershire-based advice firm 80Twenty Consultancy, a former appointed representative of Honister Capital. In its letter, FundsNetwork referred to Honister Capital as 80Twenty’s “holding company” and said the firm was no longer providing advice despite the fact it had been reauthorised as a Sesame AR. One of the “clients” FundsNetwork wrote to was 80Twenty managing director Neil Welbury.

Welbury says he notified Fidelity of the error but Fidelity Worldwide Investment wrote to clients again in February, saying they had been “upgraded” to Fidelity’s personal investment service.

Clients who had invested at least £100,000 with FundsNetwork were also offered a loyalty bonus discount of between 0.15 per cent and 0.25 per cent of the annual management charges on some funds.

Welbury says he contacted Fidelity to ensure all clients were reallocated to him but in another blunder, Fidelity turned off a client’s FundsNetwork account and mistakenly allocated him to an adviser at a different firm.

He says: “There has been a catalogue of failures here by Fidelity. What has made it worse is the fact that Fidelity effectively tried to entice me away from my own business.”

Fidelity says it gave former Honister advisers six months to become reauthorised before it sent the mailings but in this case did not receive instructions for the 45 80Twenty clients. It is working with 80Twenty to contact clients and let them know the firm has been reauthorised.

A Fidelity spokeswoman says: “This was a communication for clients of Honister advisers for whom we did not receive transfer of agency details. We are fully committed to the relationships we have with advisers.”

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Comments

There are 6 comments at the moment, we would love to hear your opinion too.

  1. This is shocking! We are certainly learning who to trust and who to work with moving forward. Fidelity FNW certainly are not one of them. I have also had several issues with FNW and I would urge advisory firms to be very careful.

    Panic and greed from platforms and insurance companies is leading to this type of senario.

  2. They have been marketing direct to clients for years. If you support a company that has adverts for direct business in the broadsheets at no cost then you are feeding the profits of direct competition. Serves them righy I say

  3. Stephen Rowland 2nd May 2013 at 9:59 am

    Isn’t it funny no errors EVER go the other way around ie Fidelty direct clients never getting put to an Adviser by ‘mistake’.

    Also think as things get progressively tougher – more ‘errors’ from every provider will start happening!

    Will eventually become a cannibilistic scenario where every Provider will automatically think that EVERY client on it’s books is ‘fair game’ & THEIR CLIENT!

  4. Yet another company that will see the loss of IFA confidence reflected in the accounts. Dishonest and incompetent providers do not deserve continuing support. For every Fidelity Fund there are other good quality alternatives.

  5. Only providers who have no direct to consumer offering at all will refrain from ‘accidentally’ marketing over our heads. For pensions, is there only Scot Life left……..?

  6. Badger’s right, FNW have marketed direct from the outset, BUT –

    Their terms for small investors are competitive, so if I avoid using them or switc themh to another platform and incur higher charges for a client, is that TCF? I don’t think so.

    A more relevant lesson is that, if you really must be in a Network, which I reckon is a daft decision, make very sure to get clients switched individually to your new firm when the Network goes bust, and also keep your clients fully informed about what’s happening.

    FNW ain’t perfect, but who is?

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