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IFAs told to bill providers for fixing blunders

IFAs have been told to charge providers and platforms if they spend time resolving errors.

In a session on adviser-charging at the Personal Finance Society’s annual conference in Coventry this week, a delegate asked the fee-based panel how they would bill for work involved in fixing an insurance company’s mistake.

Investment Quorum chief executive Lee Robertson said his firm charges insurance companies at the same rate it would a client and warned firms that are adjusting to adviser-charging structures not to be swayed by resistance from providers.

He said: “When mistakes are made by an insurance company we always bill that company. Do not take any of their nonsense about how little they want to pay you. Bill them as you would bill the client.”

Nicholls Stevens Financial Services partner Carole Nicholls, who was also on the panel, said: “The same would be true if it was a platform provider at fault, a Sipp provider or any other provider for that matter. If the company has made a mistake, I bill them for it.”

John Lamb Partnership managing director Paula Steele said: “If there has been a huge error and you have had to spend a lot of time sorting it out, send them a bill.”


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There are 10 comments at the moment, we would love to hear your opinion too.

  1. We had a case where one of the large insurers caused us considerable extra work, due to their internal “issues”. We sent them an itemised bill, based on adviser and support hours, along with our hourly chargeout rate. They sent us a nice letter and a cheque.

    We treat this as standard practise and rarely have an issue getting paid

  2. We recently lodged a substantial complaint against the Prudential whose actions lost us a case worth over £5,000.

    We billed them for our time in sorting out one unholy mess and the loss of a client which came to over £1,820 in time alone let alone the opportunity cost.

    They came back with an offer stating that they would only pay a maximum of £65 per hour and sent a cheque for £487.50!!

    I don’t have the time to spend more time trying to claim more from them in units of £65 when I can be earning more by dealing with Companies who value professional connections.

    The moral is don’t deal with Companies who don’t value your time. Before dealing with a Company in future find out what rate they will pay if they make a mistake. I have started to do so and it makes interesting reading.

  3. From a provider point of view, whether you pay the bill is completly dependent on whether or not you value the IFA. If they are likely to provide lots of new business then you pay up, otherwise you ignore it until they go away.

  4. Agree with Post # 3 at 1.16 p.m. (why anonymous?). This assumes, of course, that the provider in question is even prepared to admit any fault, which many of them won’t.

  5. And the providers, in return, can bill the IFAs for time spent on rework due to incorrect and incomplete submissions….?

    I doubt IFAs could afford it.

  6. As unpopular as I may make myself does this then mean that the product providers should charge the IFA when the IFA makes a mistake?

  7. Alistair Cunningham 26th September 2010 at 10:42 pm

    “From a provider point of view, whether you pay the bill is completly dependent on whether or not you value the IFA. If they are likely to provide lots of new business then you pay up, otherwise you ignore it until they go away.”

    Very TCF!

  8. We all make mistakes, it is how we correct them. As a result of which I follow the argument Martin Bamford has put forward i.e. the provider could charge us if we make extra work for them. As a result, if the provider makes a mistake, the staff member at the provider is appologetic, the situation is correected for teh client at no cost to the client WITHOUT me havingt o do extra work to ensure the correction occurs, then the conversation is warm and friendly and I say “we all make mistakes” to the providers staff member. If it is NOT corrected properly (which is often the case I am afraid), then my next call is to refer them back to their original error and that we will charge for any work needed to rectify it and pursue them acting as our clients agent and hence the client is liable for that work, but the provider may prefer to pay us to avoid the error resulting in a further complaint against them. We invariably get paid after sending them an itemised bill and offerring to send them a copy of the actual phone calls for them to listen to and dispute should they wish. There are one or two providers who try to wriggle and say the FSA limit how much they are allowed to pay and I refer them back to the fact it is a failure to correct an error and not the original error we are billing them for.

  9. If a providers errors or delays outwith either reasonable or stated Service Level Agreements cause the IFA extra work, and/or the client a loss, they should be entitled to a claim of an equivalent amount. Howevever, audit trails are important for the IFA, to prove and demonstrate these errors, as often it can be ‘word against word’ otherwise. Additionally, an IFA cannot reasonably bill £250 per hour in fee’s when the industry average is around £100/hr. Interestingly, a recent survey highlighted that consumers were willing to pay IFA’s only around £25/hr – so come RDR, if the market sets the price (which it will!), then some IFA’s might be in for a nasty surprise.

    Nevertheless, from a provider point of view, they/we can of course not go an bill an IFA for their mistakes – mistakes happen from both sides, something everyone just has to realise and get used to..but if an IFA’s errors are causing issues, they have to deal with perhaps not being ‘in front of the queue’ for getting things fixed, that’s the price you pay.

    If an IFA for example, screws up an investment split for a policy, and it takes the provider a bit of time to fix it, and thus the client is at a loss due to market movements in the meantime – that claim should fall against the IFA from the client, not from the IFA towards the provider (an attempt which has been seen many times in the past).

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