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Partnership faces threat of FCA action over adviser incentives

Insurer Partnership faces the threat of enforcement action as part of the FCA’s clampdown on inducements, according to a report in the Financial Times.

The FCA yesterday revealed that two firms could face enforcement action after a thematic review found evidence that arrangements between providers and advice firms could undermine the RDR.

The regulator asked 26 life insurers and advisory firms to provide information about their service or distribution agreements. It received and reviewed 80 agreements and found just over half of the firms had deals in place which could breach inducement rules. 

These included payments by life insurers to adviser firms which appeared to be linked to securing product sales, insurers incentivising advisers to promote products and joint ventures which could create conflicts of interest and potentially lead to biased advice.

Partnership refused to comment on the FT report. A statement from the insurer says: “As a matter of policy, we never comment on communications between ourselves and the Prudential Regulation Authority or FCA.”

Partnership is involved in a number of distribution deals with independent and restricted adviser firms.

In April, Money Marketing revealed Openwork could receive more than £15m from Partnership under the terms of a controversial single-tie annuity deal. 

In a statement to Money Marketing, Openwork says it is not involved in any enforcement action related to the FCA’s thematic review into incentives.

Partnership has a distribution relationship with Sesame, alongside a number of other adviser firms.

In April 2010, Partnership bought a 50 per cent stake in Sesame Bankhall Group’s retirement referral arm Gateway Specialist Advice Services. At the time it was estimated the deal cost between £500,000 and £1m.

Sesame was unavailable for comment at time of publication.

Henderson set up a number of joint ventures with adviser firms including Sesame and Intrinsic. A proposed joint venture with Paradigm was axed in April.  

In a statement, Henderson has confirmed that it is not involved in any threat of enforcement action as part of the FCA’s thematic review. 

A Henderson spokesman says: “We cannot discuss commercially confidential matters, but we are satisfied our UK retail joint ventures meet both the regulations and the spirit of RDR. We can confirm that Henderson is neither in enforcement nor has it been referred to enforcement for this or any other matter.”

Partnership’s share price has fallen 7 per cent today, to 406p by 12.30pm. 

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Comments

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

  1. Gladly we were able to advise the FCA that we received no incentives from providers. They were never offered in the first place, of course, as they were or are aimed at the larger firms to obtain market share. One good thing about the RDR is that we should now all be playing on a level field. There are of course still exceptions!

  2. I would like to go on record to confirm that we threw the mojito chocolates they sent us earlier in the week in the bin. We still believe they should face FCA enforcement action, simply for thinking that rum, lime and mint was ever a good combination for a chocolate recipe.

  3. Tim tim@pagerussell.co.uk 19th September 2013 at 4:21 pm

    @ Martin: LOL!

    I can’t bear it any longer. I must come clean and admit that I was too greedy. I allowed myself to be induced and I tried the Partnership chocolates. Just the one mind. That was enough to confirm that they tasted as bad as was reported – the rest went in the bin. I certainly won’t forget them in a while…

    Maybe that was the idea?

  4. Campbell Macpherson 19th September 2013 at 9:35 pm

    How strange. Those paying the money have a case to answer but those taking the money don’t? And I still think it is ironic that it is often a complete waste of money anyway. As Martin and Tim have alluded to above, these “inducements” have little or no affect on advisers. But they sure do plug the holes in the P&L accounts of the odd network!
    http://www.campbellmacpherson.co.uk

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