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Is this the end of adviser/ provider jollies?


Advisers look likely to be banned from accepting provider hospitality to sports matches and other entertainment under the FCA’s crackdown on inducements.

In its final guidance on retail investment advice inducements and conflicts of interest, published this week, the regulator sets out acceptable practice.

It published a list banning overseas trips, “extravagant” food or drink, overnight stays and trips to sports matches. Make no mistake, the FCA wants expensive entertainment for advisers to be a thing of the past.

The FCA says that before accepting any provider entertainment, advisers must now ask themselves three questions: Is it reasonable? Does it benefit the client? Is there a better way of benefiting clients?

For example, the guidance means advisers are banned from attending sports matches in a corporate box because of the significant cost.

The FCA has already cracked down on Lloyds Banking Group’s “champagne bonuses” and “grand in the hand” sales incentives. This is the same principle at work – any expensive incentive has the potential to drive product sales and therefore increase the risk of bias.

The financial services sector is one the biggest sponsors of sports and entertainment and many firms use the deals for extensive corporate hospitality.

Aberdeen Asset Management sponsors the Cowes Week sailing event and invites large numbers of advisers (and journalists) down to the South Coast each summer. 

Aegon is a big sponsor of UK tennis, taking IFA clients and journalists to Wimbledon and the Aegon Championships.

Royal London sponsors England’s one day international cricket while LV= sponsors the county championships.

This is a random selection and there are many more examples to choose from. Providers will surely be asking whether it is worth risking the FCA’s wrath by inviting advisers to such events.

Whilst not directly relating to sponsorship, the FCA has made its feelings on inducements perfectly clear, with Partnership and one other firm being investigated by the FCA’s enforcement team.

Aberdeen Asset Management says it is looking at its arrangements following the FCA paper. Scottish Life, part of Royal London, says it is too early to assess the impact but says it will conduct a “thorough review” of its current internal rules. Aegon says it is looking at the paper but it is too early to assess its impact.

This ban could have a big impact on adviser-provider relationships. They will be far more formal, documented affairs related totally to business with no frivolous entertainment. 

For example, would drinking alcohol with a provider ever be described as benefiting your client? Is a steak and a mid-priced bottle of wine “proportionate” for a lunch?

The FCA will argue it does not intend to ban all adviser-provider contact out of the office, just the lavish trips, but its new guidance could have a dramatic effect.

Syndaxi Chartered Planners managing director Robert Reid says: “If you have a good gift register and a good new business register then the FCA can check if there is a link between the two. This could be solved by some form of combination of the two registers to spot trends. Not everyone is influenced by hospitality and I certainly am not.”

The FCA has also opened itself up to the charge of hypocrisy, after its board attended a 48 hour “away day” at a five star London hotel at a cost of almost £15,000.

Surely £500 a night would constitute “extravagant” under its own rules. Does this lavish trip, which the regulator says is “standard practice”, create an inducement for the FCA to raise fees?

Samuel Dale is politics reporter at Money Marketing – follow him on Twitter here

FCA guidance on good hospitality practice

  • The event at which the hospitality was provided was located in the UK.
  • Adviser attendance is not based on criteria that incentivise poor behaviours such as business volumes.
  • The event is designed for business purposes, such as product training, to boost advisers’ customer service.
  • Payments for food and drink are proportionate, not extravagant and any overnight accommodation are only paid for where necessary.
  • Providers calculate the ‘per head’ costs of the hospitality and check the reasonableness with the compliance department.
  • Promotional prizes are not extravagant and linked to increase knowledge of a provider’s products or services.
  • Gifts are not extravagant and were not based on criteria that incentivise poor behaviour.
  • Providers keep a regularly reviewed log of all hospitality and gifts provided to advisers over a specified period to ensure some do not receive too much.


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There are 7 comments at the moment, we would love to hear your opinion too.

  1. I assume this will of course apply to any hospitality offered to any FCA members by any financial institution which it regulates.

  2. This is a bit ironic when you consider what the FCA considers reasonable expenditure. However it doesn’t apply to me. I stopped receiving “jollies” years ago. Perhaps because I am an Independent Financial Adviser and advise my clients not to put all their eggs into one basket. So if anybody is losing out “good”. I have to pay for all of my own holidays and benefits.

  3. Most hospitality I have been offered was as a thank you for business already placed, not an inducement to put more their way. I have never accepted much anyway beyond a trip to the Oval with Standard Life. Like most IFAs I am sure, the choice of provider has always been what is in the client’s interests not what the provider can offer by way of gifts, sports days etc.

    The word here seems to be “guidance”. This suggests to me the decision is with the IFA whether to accept any invitations offered. The “wrath of the FCA” is likely to be superficial and easily deflected unless eg, having not dealt with Company A for several years you accept an invitation to spend a fortnight in Monaco with them all expenses paid and shortly after your return place a 100k investment with them into one of their funds which lost 45% last year. Then perhaps the FCA might be justified in suggesting a possible link……

    This whole thing appears to me to be a bee in someone’s bonnet at the FCA. I don’t think I would have any problem with it in extreme cases. But proving the placement of business was determined by the acceptance of so called “inducements” would be difficult to put it mildly. Has the FCA really got nothing better to do?

  4. To be honest a lot of this has fallen by the wayside over the years and certainly small IFA’s like myself don’t even warrant a single point of contact with some companies never mind hospitality. This also works with an opposite effect as I can often think well if that company isn’t bothered about me then i’m certainly not botthered about them and thus might tend not to use that particular company.

    Sometimes these things are a way of saying thank you rather than an inducement. Ok we’re not daft enough to think they don’t want to portray themselves in a good light in the hope of receiving future business. However, I object to the FSA trying to tell me that i’m not intelligent nor strong willed enough to decide for myself. Like a naughty child I’m having to be told that mother (FCA) knows best.

    The tin hat however, is the audacity of these people when we read what they have spent on a night away for a board meeting. It is a quite staggeringly scandalous way of spending money that they have levied with abitrary fees and levies. Money that they have not earned themselves but deem themsleves fit to spend with gay abandon. Allied to this is the over charge on fees that they point blank refuse to give back, why? Because they don’t have any money left, they spend everything they get in, including £15,000 on a night away. Nice work if you can get it. In addition why are they not using the massivley expensive Canary Wharf building for their board meetings, you know, the one with a board room for….what is it now?.. Oh yes! Board meetings, I almost forgot. Why are they even in Canary Wharf anyway? The stock answer was always so that they were “right in the heart of the UK’s financial district” So why is this? Why this need? Is it so that they can keep a close eye on any potential wrong doings at the banks, provide firm hand and prevent problems happening? Well history says obviously not! As the financial crisis of 2008, Co-Op Bank, RBS, Halifax, B & B, Northern Rock, PPI misselling, Endowments, LIBOR rigging, Arch Cru, Keydata, Split Caps etc etc etc proves.

    I would also like every single member of FCA staff to list any contact they have had with any financial institution and whether any kind of hospitality, lunch, coffee, accommodation was involved and who paid. I bet they won’t though.

    One word – CORRUPT!

  5. Michael A Thomas 17th January 2014 at 7:00 pm

    About time!!!!!!!

  6. This surely brings us into line with the rules that apply to our MPs ands senior civil servants then?

    Oh, hang on …

  7. If i didn’t know better i’d start to think the FCA were trying to take all the fun out of being an adviser.

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