Sesame pulls roadshows in wake of inducements crackdown

Sesame has cancelled up to 10 provider-sponsored roadshows following the FCA’s crackdown on inducements, Money Marketing understands.

In its final guidance on inducements, published last week, the FCA sets out hospitality that is acceptable for advisers to receive.  Firms have three months to make changes based on its guidance.

As a result, Sesame has decided to cancel the protection-focused roadshows, which were due to run throughout February and March across the country. The first roadshow was due to take place at the Cedar Court Hotel in Wakefield on 18 February. 

Money Marketing understands providers were informed earlier this week, with the inducements paper given as the reason for the cancellation.

Sesame declined to comment.

The original review of inducements, published in September, found payments by providers to advice firms was related to securing product sales and made clear these should be banned. 

The final guidance says firms must focus on non-monetary and potential future benefits as well as purely financial rewards.

The FCA says firms need a clearly defined policy with an approved person signing off on all hospitality, most likely a senior person in the company.

The regulator has also issued warnings about providers paying for “significant services” for advisers in a bid to influence product selection. This could include paying most of the costs for a seminar or event as well as funding support services such as IT.

It also warns over increased risk of conflicts from exclusive or long-term distribution deals.

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Comments

There are 12 comments at the moment, we would love to hear your opinion too.

  1. selection of protection insurer partners should be based upon “best of breed” and not the biggest marketing budget. Maybe marketing save could be applied to reducing premiums? Or is that wishful thinking?

  2. Fancy that well resourced providers training advisers to better serve their clients cancelled due to regulatory pressure. While Keydata, Arch Cru, Harlequin, PPI and the banks in general all trundle on

    I had hoped that FCA was going to be an improvement on the last lot…clearly I was wrong…

    I would like to publicly congratulate Mr Wheatley and his team at the FCA as they now lead the field in “institutional incompetence.”

  3. This is just ridiculous. Most of the Bankhall seminars I have attended have been sponsored by providers we already use and whilst concentrating on a specific issue have included a (usually) brief advert for their own product. So what?
    If Sesame’s actions in pulling such seminars meet the FCA’s criteria then they are all idiots

  4. goodness gracious 24th January 2014 at 12:06 pm

    Would anybody like to guess how much the provider firms needed to pay to have access to the Sesame sales force, as well as the roadshow costs?

  5. If this is taken to the extreme, there will be no more seminars or roadshows which provide valuable CPD activity, and improve adviser knowledge when providing advice to their clients.

    This cannot be Treating Customers Fairly, and reverses the process of increasing professionalism post RDR.

    For my consultancy role I need to meet with a number of fund managers, and multi company events are ideal for that purpose.

  6. This quite disgusts me, because the new FCA criteria are completely reasonable. You can read the new guidance here: http://www.fca.org.uk/your-fca/documents/finalised-guidance/fg14-01
    I wouldn’t expect any firm to provide anything beyond what is permitted in there. So the fact that Sesame were planning to do something which still managed to fall outside these broad rules (to such an extent that they have now had to publicly pull the whole lot) shows the extravagance they were planning. I’m very, very pleased that the FCA are starting to crack down on this. However it is a shame that this has come about when the FCA board have recently gone against the whole principle of this. There is just no need for these sort of luxuries in financial services any longer. Anyone who thinks there is should perhaps start looking at trading second-hand cars on the side.

  7. @Geoff Sharpe – don’t worry, you can still have your meetings. You can even invoice the provider for them if you hold them on your own premises.

    From: http://www.fca.org.uk/your-fca/documents/finalised-guidance/fg14-01
    2.15 The COBS inducements rules ban the provision or receipt of any fees, commissions or
    non-monetary benefits, that relate to designated investment business carried on for a
    client, which: …
    • are not designed to enhance the quality of service provided to a client

    2.27 Guidance in COBS 2.3.15G paragraph 13 states that a provider may provide an advisory firm with ‘training facilities of any kind (for example, lectures, venue, written material and software)’. To comply with the inducements rules the quality of service to the client must be enhanced as a result of such payments.

    2.28 A provider giving an advisory firm training on the features and benefits of its products or
    services, or subject areas relating to the adviser’s continuing professional development
    (CPD), is unlikely to impair its compliance with the client’s best interests rule if the training is made reasonably available to all advisory firms that could recommend the provider’s products or services on an equal basis

    2.29 We recognise that it can be cost effective for advisory firms to hold training events where
    providers deliver training on their products, and in these circumstances it is reasonable for the providers to share in the costs of arranging such training, provided it is UK-based.

    2.30 Guidance in COBS 2.3.15G paragraph 7 states that ‘a provider may take part in a
    seminar organised by an advisory firm (or a third party) and pay towards the cost of the
    seminar if its participation is for a genuine business purpose and the contribution is reasonable and proportionate to its participation and by reference to the time and sessions at the seminar when its staff play an active role’

  8. Well said, KC.

    CPD? Best of breed? Valuable training?

    If it was all that, then why has it been pulled?

  9. I think the underlying problem is that many of the Networks, and larger Support Service Providers have abused their power over very many years, not to mention their need to pay for their top heavy management structures.

    Network members and Support Comapny customers alike are told that the benefits of paying their mambership fees buys them a range of benefits, including regular mambership seminars, but the reality has always been that these ‘training seminars’ have always been 100% paid for by Providers, and I imagine that a study of most of the agendas would show that at least 50% of the meeting is devoted to sales pitches.

    Of course, it was ever thus. In the 80s and early 90s, I worked for a Mutual Life Company, and from the early days of the DBS and Countrywide networks, we could only get a slot on their meeting agendas by paying them a vast amount of money, in return for which we could offer ‘training’ sessions, which were mostly nothing more than thinly disguised sales pitches.

    That’s the way it was, but don’t try to kid me that it was anything more that buying business.

    During a period a few years ago when I decided to use a Support Services Company, it very quickly became clear that nothing had changed. I now use smaller Support Service Providers on an ‘as needed’ basis, who do not accept support or inducements from Product Providers.

    Independent means just that, and tthe sooner we all fully accept that the better, in my view.

  10. No doubt that there will be those prepared to bend the rules to buy business, that is the way of the world, and very often there is a wide interpretation of any rules prescribed by the Regulator, as we are not allowed to refer to them by their acronym! I personally avoid anything that looks like a jolly, if only to avoid all the pestering phone calls afterwards asking for business.

    With reference to the receipt of non monetary benefits which do not enhance the quality of service to the client, if I were to attend a full day and evening conference in London, which involves four hours travelling and costs £50 of my money, and the provider pays for overnight accomodation which is valued at less than my time cost for attending, surely this is not an inducement. My point is that this sort of thing can be interpreted both ways.

  11. Let’s be careful what we wish for. Much of the infrastructure that exists within the industry, from Regulators to the networks has been funded in no small part by the product providers, who have a vested interest in ensuring that their products can be distributed through a population of regulated advice outlets. If we restrict their attempts to assist in this process, what good do we do?
    Apart from the Regulators, the providers have either members or shareholders to answer to, and will have money set aside to help market their products and services. If the price they pay for access to the adviser market place is within their budget and provides them with the return that they want, then who are we, or the regulators, to decide how they spend their budget? If the networks can make a surplus on arranging seminars at the expense of the providers, who are happy that their marketing budget is being well spent; so what? The consequences of them not being able to do this are likely to be an increase in membership fees, or further reduction network numbers. I can’t think that many advisers would fancy the prospect of paying more in fees, or seeing another network go under.
    As an industry we have singularly failed to make any serious inroads into the protection and pensions gaps that persist in this country. Many would argue that with the existence of an increasing advice gap, the Great British public are likely to be less well catered for than at any time in the last 25 years. Is any of this helping?

  12. Not sure if this is still the case, but quite a few years back I worked as a area manager for one of the smaller life companies. In order to be able to present at Sesame roadshows at the time, a significant sum needed to be paid to Sesame in order to gain access to the advisers. This was well above the cost of the actual hotel room and bacon butties (which I am fairly certain were paid for on top of the annual stipend required). I have no idea if this is still the case, but if it is then there is no question in my mind it would contravene the new rules.

    In fact, the small life company that I worked for at the time ended up pulling out of the roadshows after a couple of years because sesame pulled the “small firm discount” that had been negotiated and the annual payment that they were looking was pretty much the same as the entire companies annual marketing budget.

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