How ironic that many of those companies holding themselves out as ethical or morally superior often display a tendency towards the hypocritical and supercilious. I was reminded of this recently when asked to review a friend’s investments arranged by Britannia and even more recently when speaking with Ecclesiastical, the “socially responsible investment experts with a difference”.
Britannia has now merged with the Co-operative Bank, a move aimed at affirming a collective commitment to social responsibility. It was not that long ago I applied to the Co-operative for a loan and was told that if I took out its PPI plan, my application would be looked at more favourably.
Nonetheless, my friend who had entrusted her investments to Britannia told me the nice man had advised her and her late husband to spread the £70,000 investment to reduce risk. This sounded reasonable until I discovered the two unit trust Isas and the obligatory investment bond had all been placed in the Axa distribution fund. As a tied agent of Axa, there can be no argument with the single-company aspect but all investments in the same distribution fund?
A closer inspection revealed the nice man had arranged the bond on what I assume to be the absolute maximum commission basis, almost 8 per cent up front with no fund-based commission, translating into a penal early encashment penalty of 12 per cent.
Now, Ecclesiastical has some excellently managed funds and I have made some use of these over the past few years. So where is this afore-mentioned “difference”?
A week ago, I was reviewing a client’s portfolio and telephoned Ecclesiastical for a valuation. Simple, right? Well, no. Apparently this could not be provided because I did not have the necessary authority.
Having suffered this type of nonsense before, I prepared myself for a conversation about how the records were clearly misaligned. Not so, it seems Ecclesiastical has a policy whereby every two years the adviser must obtain a fresh letter of authority from the client. I was the original adviser for this investment some four years earlier and explained this, politely suggesting they were confused. Had they received notification from the client or another adviser of a change of agency? Not at all, it is simply a rule they believe to be judicious and balanced.
At least we now know what the “difference” is – they invent implausible rules that even the most pedantic of insurers would shudder at introducing.
The very same week, it was revealed that customers of Nationwide Building Society, which is tied to Legal & General, pay up to 20 per cent more for their life insurance because of the higher commission rates they have negotiated.
When consumer advocates, regulators and other pontificators tell me IFAs are amoral and desperate commission junkies, I will point to these bastions of respectability and ask, is this what we must aspire to?
Alan Lakey is partner at Highclere Financial Services