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MM leader: Time for an adviser redress scheme

If a company over-charges its customers to the tune of nearly £120m you would expect some pretty serious repercussions from the regulator.

When Standard Life hit pension costumers in a supposedly safe pension investment with a £100m downward revaluation in 2009, the firm quickly repaid the money following a media outcry. This did not prevent a £2.45m fine.

In deciding to set up its first consumer redress scheme in response to the Arch cru debacle, the FSA suggested advisers would have to repay clients £110m, with a third of advisers who sold the funds expected to go bust as a result.

Yet, last week’s revelations in Money Marketing that an “anomaly” had caused the fee-block which contains the majority of financial advisers, alongside other brokers and dealers who do not handle client money, to be overcharged by £118m over five years is unlikely to trigger a similar adviser redress scheme.

There have been plenty of positive noises coming out of the regulator in recent months. For example, its decision to delay new capital adequacy requirements for advisers and undertake a review of the proposals and its admission that costly disclosure rules have failed advisers and consumers.   

It’s acknowledgement of the anomaly and resulting fee block reform is also a positive move.

However, the regulator should look to make further cuts to adviser bills over the next few years to take account of the extra costs already paid.

Cost of living election dangers 

The cost of living will be the main battleground at the next general election and we are already seeing worrying signs of how politicians are looking to use personal finance to arm themselves with cheap ammunition.

Prime Minister David Cameron’s outrageous claims that Help 2 Buy 2 was saving borrowers £2,500 a year, conveniently compared to 2007 mortgage rates, shows how MPs will look to shoe-horn such a narrative into every policy they can, without letting the facts get in the way.

The Government’s pension charge cap proposal, after the Office of Fair Trading dismissed such a move and with competition driving down charges, look suspiciously like another example of this trend. Policymaking should be driven by the best interests of the consumer, not by politicians eager for another pre-election sound-bite.

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Comments

There are 4 comments at the moment, we would love to hear your opinion too.

  1. “However, the regulator should look to make further cuts to adviser bills over the next few years to take account of the extra costs already paid”

    Bugger that !!! I want my money back now please with interest, and what about the poor sods, who are no longer in business post 2013 have they not paid their fees from the past.

    They (the FCA) are not the inland revenue and just alter your tax code if you will ?

    This money needs to be paid back now and deducted from past bonuses and the reduction of future bonuses not out of the revenue paid for by the industry !!!

  2. We are currently doing a review of our business in line with the FCAs Retail Conduct Risk Review and one of the self assessment questions we are answering relates to what we will do if we fail to provide the agreed service to a client pay us an on-going adviser fee. In other word we have overcharged the client. Rightly and morally our answer is and would normally be refund the fee.
    The hypocrisy of it all makes one despair.

  3. Naturally, as one of the many who’ve been severely overcharged to support the FSA gravy train, I’d love to be proved wrong, though I imagine the response from the FCA, should any be forthcoming, will be That was the last lot, nowt to do with us and, as the FSA no longer exists, there’s nothing to be done about it now.. And who was in charge of the FSA whilst all this was going on? Are there no bounds to this man’s failures in office? And to think he was awarded a knighthood! For exactly what? we feel entitled to ask. Certainly not for having done anything remotely resembling a good job.

  4. I can see this being an adviser Levy to pay back advisers….

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