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IFAs too risky for credit merchant facilities, say banks

IFAs have attacked three high-street banks for their reluctance to offer credit card merchant facilities to advisers, who they claim are a high risk.

Needanadviser.com director Ashley Clark&#39s application for a merchant account was refused by Barclays, HSBC and Natwest/Royal Bank of Scotland although it is now being considered positively by Lloyds TSB.

Clark says credit card facilities are important for fee-based IFAs as they allow clients to spread the cost of their services as well as enabling more internet transactions.

The problem relates to section 75 of the Consumer Credit Act, under which the bank is jointly liable with the retailer to make a refund for faulty goods or services.

Barclaycard spokesman Ian Barber says: “Unsurprisingly, given what has gone on with pension misselling and so on, it is seen as an area that is dangerous. We are basically underwriting the risk. But I am not aware of us ruling out IFAs as a group.”

Aifa director of public affairs Tracey Mullins says: “This is the pot calling the kettle black. Less than 15 per cent of complaints on life and pensions to the ombudsman are against IFAs.”

Clark says: “The banks are happy for us to bank with them and have our capital on deposit but do not want to offer us merchant accounts. It has been a real battle for us.”

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