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Shop talk

About 15 years ago, shortly after becoming a journalist on this newspaper, I had an interview with a life office senior executive.

He let slip that the firm believed that “shopping” dodgy IFAs engaged in misselling activities was vital for the industry. Telling the regulator about any concerns over an IFA’s conduct was not just something that life offices should engage in but also other advisers.

We ran a story on the subject in Money Marketing. The result was deafening silence. No IFAs wrote in to complain, nor did any life offices I spoke to demur from the idea that passing on names of wayward advisers was wrong.

Yet, somehow, the mood has changed. FSA chief executive John Tiner recently gave a speech in which he appeared to be calling for the industry to do rather more than simply ensure its products were in line with customers’ needs.

Tiner said: “Although the responsibility for provision of advice falls on the distributor, one of the issuesis the provider’s responsibility for providing the right type of information to the distributor at the right time so that the distributor can properly advise on and recommend the product.

“It is also imperative – for business as well as regulatory reasons – that providers take an interest in the overall quality of their distribution, not necessarily by proactively monitoring the behaviour of individual distributors but by considering what the aggregate statistics tell them about the quality of sales.”

Now, most advisers would agree with the first point. The sticking point is over the latter point – that of providers’ looking at the quality of sales by all their distribution channels.

Aifa director general Chris Cummings was quoted in MM as saying that providers checking the quality of advice could lead to confusion over responsibility for misselling.

It is obviously the case that a life company has better things to do than go through all the cases being proposed by IFAs but nestling amid all the non-contentious sales, there will be some that really stand out because of the implicit poor quality of the advice being given.

If that was a single isolated case, a quick call from a life company inspector querying the recommendation might be enough but if a pattern emerges, are we saying the provider should keep quiet?

If an IFA notices that clients of another firm down the road were being given pretty bad advice, should they say nothing? I don’t think so and I don’t believe many IFAs do, too.

About once a month, I get an email from an IFA telling me about the “activities” of another.

I am not talking about “poor” advice. I am referring to cases where it is pretty obvious that the adviser is taking the mickey out of his clients and doing so repeatedly.

In such cases, I believe it is the duty of IFAs to “shop” so-called colleagues, just as it is for life companies to do the same about each other.

Let no one doubt that it does not already happen. In November 2003, J Rothschild Assurance was fined 250,000 after the FSA found that the company had failed to police its appointed representatives properly in respect of transfers of other companies’ products into its own. The information came from other companies, who were being subjected to this churning.

Ah yes, churning. It has become fashionable to talk of churning as if it were a wholly positive move.

Even ABI director general Stephen Haddrill appears to have got into the act. He told a Labour conference meeting: “If you talk about telephone services or electricity services, you argue there should be competition that should lead to people switching from time to time.”

As with his predecessors, he compares activities where a consumer might pay a few pounds more a month for one supplier’s services compared with another, with potentially life-transforming decisions about retirement planning. How nice to see that the ABI’s arguments have not changed one iota in all these years.


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