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.”