View more on these topics

Intrinsic loans ‘could breach FCA inducements rules’

Advice firms accepting loans from Intrinsic under its practice buyout scheme should be wary of breaching the FCA’s inducement rules, say compliance experts.

It is understood the FCA has written to providers to request details of any loan arrangements they have with advice firms.

Last month, Intrinsic announced it will make loans available to appointed representatives looking to make acquisitions. Both buyers and sellers must be part of the network to be eligible for the multi-million pound scheme.

It said that financial backing from its parent company Old Mutual Wealth will allow it to offer the loans at “preferential rates” of 3 per cent above Libor.

The FCA’s inducement rules state that a product provider should not provide credit to an advice firm unless it is done on commercial terms and the provider is not able to exercise any influence over the advice firm.

Intrinsic says the loans are made by itself, and not by Old Mutual.

However, the terms of the scheme, seen by Money Marketing, state: “Old Mutual Wealth has agreed to provide the funds that enable loans to be made available on very competitive terms.”

Threesixty managing director Phil Young says: “Development loans from providers need to be offered at standard commercial rates to avoid the inducement rules. Intrinsic aren’t a provider, but if the funding in reality comes from Old Mutual you’d have to question whether this was in the spirit of the rules.”

The Phil Billingham Partnership director Phil Billingham says: “The firms themselves state that the reason Intrinsic are able to do this is because of the financial backing of Old Mutual, so this seems to be a semantic point.

“I would be concerned if the firm receiving the cash was an IFA, and was still holding themselves out as an IFA after taking the cash. The terms of those deals would warrant some close scrutiny to see if there was the potential to pervert the market.”

Another compliance consultant, who does not wish to be named, says: “An Intrinsic member who has taken one of these loans should be extra diligent in its record keeping if they have placed products with Old Mutual.”

An Intrinsic spokesman says: “The loan agreement is between Intrinsic and the adviser and, as part of a financially strong group, Intrinsic is able to offer the loans at a competitive market rate. All decisions are made by Intrinsic and not influenced by Old Mutual Wealth.”


News and expert analysis straight to your inbox

Sign up


There are 8 comments at the moment, we would love to hear your opinion too.

  1. Which platform does Intrinsic advocate for it’s restricted IFA proposition?

  2. I am not a Restricted adviser with Intrinsic so don’t know for certain but I believ they have Cofunds, Old Mutual and Ascentric on their provider list as platform providers with the Cirilium funds (now owned by OMGI) as the default fund choice for investment and pensions

  3. Aren’t Standard Life doing something similar? And Best Practice?

  4. i wonder if this will all end in tears as it has done many times before ?

  5. Yes sort of for Standard Life but Best Practice are funding theirs in house so there is no provider input and thus no conflict of interest

  6. the elephant in the room 6th March 2015 at 6:25 pm

    @ Phil. “Restricted IFA”? Really?? Now that is an oxymoron!!

    Anyway 3% over base is not that ‘preferential’ – I have a mortgage at 1% over base – now that’s an inducement!

    Seems like a non story to me….unless it comes with conditions relating to the parent funds etc

  7. the elephant in the room 6th March 2015 at 6:41 pm

    @ Dave “Restricted IFA” really – now there’s an oxymoron!

    3% over bank base is hardly preferential – I have a mortgage at 1% over base.

    Seems like a non-story to me unless its conditional that OM funds or platforms are used. Are they Tessa – is that what’s being said here?

  8. I think you will find that 3% over based for an unsecured loan to purchase a client bank is very preferential compared to what could be secured from a commercial lender in the same circumstances and terms

Leave a comment


Why register with Money Marketing ?

Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

News & analysis delivered directly to your inbox
Register today to receive our range of news alerts including daily and weekly briefings

Money Marketing Events
Be the first to hear about our industry leading conferences, awards, roundtables and more.

Research and insight
Take part in and see the results of Money Marketing's flagship investigations into industry trends.

Have your say
Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

Register now

Having problems?

Contact us on +44 (0)20 7292 3712

Lines are open Monday to Friday 9:00am -5.00pm