Host of Radio 4’s Moneybox and Money Marketing columnist Paul Lewis has doubled down on his advice to consumers to never use a restricted financial planner.
Presenting at the Money Marketing Retirement Summit today, Lewis maintains restricted advisers are still often linked with a sales culture, and that the status was often unclear over service provided.
Lewis adds that restricted advisers may still recommend unsuitable esoteric investments.
Lewis says: “I would never, ever, ever recommend, interview, have on my programme, a restricted financial adviser, under almost all circumstances. The problem with restricted advice is there are two sorts: the ones who are restricted because they work for a company or they only recommend half a dozen companies, and the ones who are restricted because they only do one thing very, very well.
He says: “That distinction between the two halves of restricted advice, created by the FCA, is what causes the real problem. But because you can’t make that distinction easily, you have to say never, ever, ever go to a restricted adviser because they can’t advise you. Many of them are just there to sell you something.”
However, Lewis also acknowledges inappropriate recommendations have been made by some independent advisers, particularly around defined benefit transfers.
He says: “Those people blatently making money out of misselling defined benefit schemes to Port Talbot steelworkers and to others as well, were generally IFAs. Some were qualified financial planners. So how do I, who have always said to people, to protect yourself, make sure they are independent, find the best qualified, find the people who have put the effort in to being a financial planner, how do you advise people to find a good financial planner, when even at the peak of financial planning, some of them just can’t be trusted?”
Based on the FCA’s findings, Lewis estimates £18bn could have been transferred into potentially unsuitable schemes. Lewis believes contingent charging should be banned.
He says: “The cancer of commission, the conflict of interest, that was behind [pensions miselling in the 1980s]. If you do one thing I get paid. If you do another thing I don’t get paid. So how can advice be trusted when it works like that?
Lewis adds: “So we come to the modern day and contingent charging….An army of introducers have sprung up like the skeletons in Jason and the Argonauts, sown by the dragon’s teeth of pension freedoms and rock bottom interest rates.
“They appear, unregulated, ruthless mercenaries whose only goal is to make a kill and take the money. Just as commission was the cancer at the heart of the financial services industry until the FCA stopped it…contingent fees create that fatal conflict of interest between client and adviser.”
Lewis praises the pro-bono work of advisers who helped British Steel Pension Scheme members who were targeted by unscrupulous introducers and IFAs.
He argues just as there were fears that the end of commission and transparency would cause people to walk away from advice, but clients have in fact remained, cutting contingent charging would not have a significant impact on the numbers seeking advice.
He adds he remains justified in using the word “advice” around financial information for consumers despite not holding financial planning qualifications, arguing that there remains a distinction between regulated advice and more generic advice on financial matters, but this should still be labelled advice.