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PFS looks to shift misselling liability

Shifting the burden of misselling liability from IFAs to product providers will be a top priority for the Personal Finance Society when it launches in the New Year.

PFS public affairs director John Ellis is concerned that the present balance of liability is unjust. He believes the IFA industry is in a downward spiral as under-capitalised businesses are hit by misselling costs and forced into liquidation, leaving surviving firms to pick up an ever bigger tab from the Financial Services Compensation Scheme.

Ellis is fearful that as product providers close their direct salesforces and transfer their attention to the IFA sector as a means of distribution, IFAs are having to pick up even more liability.

He believes there has been an over-strict interpretation of the law of agency which enables product providers not to take responsibility for advice given by IFAs and is looking to see if there is something that can be done to redress the balance.

Ellis says: “This is going to be a big issue for the PFS in the New Year. The change would have to come from the FOS initially which would have to look more closely at providers when considering misselling.”

Trinity Financial Planning sales and marketing director Chris Hind says: “Providers should definitely take more responsibility if they have created a risky product – it is only a drop in the ocean for them. The IFAs are the ones who are lambasted in the press and our only recourse is PI insurance, which has gone through the roof.”

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