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Platforms have responsibility for orphan clients

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Platforms have been told they must consider how they will treat orphaned clients who no longer want to deal with their adviser, especially when they have no direct-to-consumer offering.

In its platform policy statement, the FSA warns platforms they will have to carefully consider their “contractual obligation” to clients who decide they no longer require the service of an adviser.

It says it recognises not all platforms have a direct-to-consumer offering and some insist on transactions being carried out by an adviser.

The FSA says: “The platform will need to consider what to do in a situation where the client no longer wants to deal with that adviser. If the client does not require an ongoing service from the outset, this may raise questions about whether the adviser should place a client on a platform when providing advice.”

Fidelity International head of fund partners Ed Dymott says the need for platforms to provide non-advice functionality for consumers is becoming more important. He says: “It is a fundamental area and platforms must be able to service customers no matter whe-ther they are investing through an adviser or not. Those platforms who are not able to carry out that function should make sure they are in a position to do so after the RDR.”

Investment Quorum chief executive Lee Robertson says: “Platforms do have a responsibility to look after orphaned clients but they need to be careful not to give advice they are not qualified to give.”

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Comments

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  1. How many clients seek advice from an IFA but then declare that once they’ve made their initial investment, they require no ongoing advice or service thereafter? Vanishingly few would be my estimate. So why is the FSA even bothering to make an issue of it?

    If for some reason such as the retirement or death or deauthorisation of an adviser a client finds himself without an intermediary, all the platform operator need to is write to him pointing out that it does not provide advice, along with some suggestions as to where the client may wish to look to find a replacement. Does it really need to be any more complicated than that? Or is this yet another example of the FSA looking to press for solutions to a problem that’s all but non-existent?

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