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Financial Ltd profits fall as it makes £1.5m complaints provision

Financial Limited has posted a pre-tax profit of £165,000 for the year ending 31 March, down 51 per cent from 2010/11, and set aside £1.5m for complaints.

The IFA network’s complaints provision has risen 170 per cent from £570,000 in 2010/11. The firm says it has increased adviser fees as a result of the fall in profitability.

Revenues at the firm rose 3 per cent from £25m in 2010/11 to £25.6m in 2011/12.

The firm’s accounts state: “The difficult trading conditions continued in 2011 and the company underachieved its sales targets resulting in a fall in profitability.

“The business plan has been revisited and a further price increase has been communicated to members which should show the company returning to previous profitability levels.”

Brunning Newman Houghton director David Brunning says: “I think we are getting much more litigious and there are lots of ambulance chasers out there urging clients to complain about every aspect of financial services.

“Both sole traders and larger firms need to make sure they are bolstered with provisions against complaints. They also need to ensure they have the right compliance processes in place to minimise exposure to complaints.”



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There are 2 comments at the moment, we would love to hear your opinion too.

  1. A £1.5m complaints provision on the part of Financial Ltd suggests this must be in respect of liabilities not covered by its members’ PI insurance policies. What are these liabilities, then? Are they not recoverable from the members?

  2. Julian, for the umpteenth time, in accordance with the Appointed Representatives Regulations the network has accepted responsibility for all acts or omissions in writing as if it had expressly given the advice, that is the only way they can trade as a network and have ARs who are exempt from authorisation.

    The Network is responsible for the advice, the ‘due diligence’ of funds and products, the training and competence and the PI insurance covers what THEY are responsible for.

    An AR is contracted to introduce new business for which the Network pays a split of commission or fees (how will this work post RDR?), when the network has paid the split it have made a commercial decision to accept the new business and it cannot revisit it in future unless the AR has been guilty of theft, fraud or deception etc.

    The model is extinct but nobody will admit it, not even the FSA who class these firms as ‘high risk’.

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