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Time for providers to treat advisers as professionals

As the industry moves towards greater charging transparency you would have thought providers would have got a bit more professional in the way they treat advisers.

With the abolition of commission and growth of more explicit charging agreements, provider service levels are going to come under greater scrutiny from advisers as poor service is more likely to directly hit clients’ pockets.

However it looks like some are failing to acknowledge the changing times when it comes to compensating advisers for the hours spent helping clients deal with costly provider mistakes.

This week’s issue of Money Marketing includes details of a complaint brought by an IFA against Cofunds on behalf of a client.

After failures which led to the client being unable to make a £30,000 investment into his pension before the end of the 2011/12 tax year, Cofunds quite rightly compensated the client for the tax relief lost.

However, when the IFA, Peter Herd, billed Cofunds for his time spent helping the client, the platform would not pay up. Cofunds pointed Herd to its terms and conditions which highlight that it will not compensate advisers for time spent ensuring any client detriment is sorted out (see below).

Such a standpoint is unacceptable and needs to be challenged. Herd says Cofunds advised him he could be paid from the compensation due to his client but why should the client pay?

Alongside full compensation for the client should come a fair amount of money which takes account of the time spent by the adviser dealing with the complaint.

Herd will now be taking his case to the small claims court but it is regrettable that such actions are necessary.

We have obviously highlighted Cofunds because it is the cause of this particular adviser complaint but I’m sure there are many other providers who are failing to get with the times.

Last month, Money Marketing reported that Aviva had failed to pay an adviser his full hourly rate of £250 to sort out problems caused by poor customer service, instead paying him £100 an hour.

We’ll be asking other providers over the next week or so to outline their procedures for paying advisers in such circumstances to get a better sense of how a big of an issue this is.

Perhaps it is time to debate the introduction of some industry standards to ensure IFAs are paid appropriately for dealing with such complaints? The starting point should be that the advice firm is able to bill for the time its advisers, paraplanners or administrators have spent sorted out a client problem created by the provider.

Hiding behind the small print of terms and conditions is no way to deal with the changing demands of advisers and their clients.

Professional advisory businesses should be allowed to bill appropriately for the time it takes to sort out errors on their clients’ behalf.

Please let us know of any other examples of this happening and we will investigate further.

Paul McMillan is editor of Money Marketing- follow him on twitter here


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There are 37 comments at the moment, we would love to hear your opinion too.

  1. I have sucesfully been compensated by a number of large insurers including Scottish Life, AXA and Friends, so I’m surprised by Cofund’s stance. Once they had received our client agreement detailing fees they have all paid up in the end. And I agree, it is worrying with RDR just around the corner, as a fair amount of our time is still spent sorting out insurer admin issues. Why should our customers pay for insurer blunders when clearly its the insurer at fault.

  2. Maybe it is time for all IFA to demand that chosen wrap/platform/product providers to sign OUR Terms of Business out lining the service standards we can expect( and commercial compensation arrangements when not received) in order to receive business from IFAs!

    The boot is on the other foot! They just don’t want to acknowledge it!

    if providers want to receive IFA business they have to deliver accurate, reliable service or pay for the time putting things right, when they don’t!

  3. If the IFA bills the client for the extra time for the error then the client has to pay the bill initially. At that point the client should ask the provides to cover the payment as the client has been disadvantaged.

  4. Axa wealth Europe paid £700 last year and £500 this year to me for errors made regarding payment of a clients drawdown income. However, where as last year they paid me directly, this year they paid my company meaning, as an employee I won’t see the money coming to me until, tax and NI have been deducted. Add in the fact that I had spent more time fixing the problem the second time around and I am actually worse off no matter which way you look at it.

  5. I am the adviser who had the problem with Aviva and I am having similar problems with Scottish Life and others. The problems have become so bad recently that I am now taking a Zero tolerance apporach to this. As regards taking action through the small claims court does anyone have any experience or advice they can offer.

    Please email me on

  6. Some months ago we had a thread about some advisers being unprofessional and abusing call centre staff. Mistakes do happen and fair compensation if it is due should be paid.
    What I regularly encounter are ludicrous requests for compensation that can bear no resemblance to actual cost. Sending in ‘compo’ requests is seen by some as a routine way of making a bit of extra money by some.

    I’ve never seen a product provider bill an adviser for mistakes they or their clients make. Neither do providers write to the trade press with tales of outrageous incompetence even though there is a rich source. Always going to be a one sided story this one, I’ll get my coat.

  7. Whenever I make a claim relating to poor service, the provider often tells me that FSA guidelines prevent them paying more. However, when I ask them to refer me to the appropriate part of the FSA handbook which specifically prevents this they cannot do so.

  8. Leeds Building Society changed their affordability calculator without informing advisers, causing me to submit a case that fitted their published guidelines. It cost me two hours or more and I have asked them to compensate me for time wasted.

    Nothing heard on this after two days….I know this is not the exact subject of this piece, but the same applies.

  9. One way round this is to bill the client and for the client to include the IFA’s fee in his compensation claim to the provider. Then the client can pay the IFA’s fee.

  10. Andy, you make a fair point. I think some admin errors and mistakes are part of all things we all do in life and we just have to except it (both adviser and provider).
    However, there are times when it goes too far and on those occasions and on those occasions alone someone should pay for time spent resolving the issue.

  11. @Andy Newman Andy, thanks for your comment. Agreed we do not want to be encouraging frivolous complaints but equally it is not right that advisers cannot bill appropriately when they have put the work in to help the client. We are looking to host a round-table on the subject in the next few weeks. Let me know if you want to be involved as it would be good to get your perspective.

  12. Interesting points being made from both sides and if we are going to be working on a much stricter fee per hour basis then many more claims are going to be made.

    Trouble is the time taken to put together your case and fighting it can be as much again as the time that you have lost ..

    …….but as I see providers are now charging for extra work ( Friends Life – 3 Annnuity examples and then it’s £20/£15 a pop thereafter..) so I guess ‘war starts at midnight’…. not a good sign..

  13. One thing we have noticed is that providers assume our administrators have done the work. In reality a senior adviser/director has had to sort out the mess! It is not £25/hr but £150/hr. And while spending time doing this they are not able to earn £150 per hour they should be charging out.
    Incidentally I understand that compensation is not subject to VAT. We have been compensated too many times for comfort and it never covers the stress caused but will continue to do so.

  14. I’m sure most advisers have a ‘hit list’ of providers that constantly mess up. And I’ll bet the companies on my list are mostly the same companies as on other IFA’s lists. The secret is simply to avoid doing business with those companies.

    They will eventually get the message if enough IFAs write to the offending companies explaining why they should not expect any more business.

    I have just added another company to my list this morning.

  15. I’m pretty shocked to see an adviser suggesting that compensation receipts are not taxable if paid to him rather than his company. This shows a pretty shaky grasp of business taxation, and I suggest he should speak to his tax adviser sooner rather than later about his incomplete accounts.

  16. As we approach RDR cliff edge, there will be many more providers offering poor service due to the depletion in their staffing levels, in preparation for a drop in business levels, which will inevitably accompany the RDR commission ban.

    Commission, although abused by some in the past, has always been an economical method of clients funding their advisers initial work and ongoing service.

    Why this is an acceptable remuneration method for Life and PHI and other insurance plans and not for pensions and investments confuses me.

    I realise that this is probably an academic exercise as the FSA has to implement RDR to save face, but it is essentially skewing the market, Life offices may see a raft of re-broking of older Life Policies, which are outside the indemnity period, simply to top up the IFA firms potential decline in commissions from investment business.

    The life and investment firms who want our clients money and the CEO’s of the major networks missed a superb opportunity to stop this daft idea in its tracks and amend the commission system into just doing away with indemnity terms and allowing level commission payments to be the norm.

    Instead these craven cowardly highly paid executives, decided to hunker down, protect their own jobs, not those of their staff and kow tow to this fundamentally flawed social experiment, which was poorly researched, badly drafted (as we can see with the platform issues still to be resolved) and the alleged consumer outcomes, can now seen to have failed prior to inception and probably see a decline in the iFA sector who will only be able to operate their practices advising better off clients.

    These inadequate and poorly qualified individuals have a lot to answer for, which none of them will be called to account for the mess they are leaving us with. Sants and his cohort have already made clear that they won’t see it through so that they can put up their hands and say “not my fault”

    I will put money on not one of the architects of the RDR has even attempted to pass FPC, never mind the higher level 4 and 6.

  17. I’ve seen some obscene requests for compensation when I was a BDM. £250 per hour for an IFA £150 for admin staff, supposedly 3/4 hours worked each on chasing up a pensions transfer that was the fault of the client not completing information correctly.

    When speaking to complaints handling staff they will give you some ludicrous stories of time taken to call a call centre etc recorded…

  18. People make mistakes, it is how they correct them that matters. I’ve never invoiced a provider for a first mistake, it has been when they’ve cocked up the correction and as Sam Caunt said, it is then the adviser who has to help, not the admin staff.
    We usually invoice the provider, but it would probably be better post RDR to send a fee agreement to the client AND the provider before
    we agree with the client that either the client, the provider or WE resolve the problem at whatever hourly rate/ compensation for work to correct any party has to do, it then becomes the client and the providers choice, not ours. True independance perhaps?

  19. Matthew Whiting 14th June 2012 at 3:04 pm

    IFA’s should be paid when the provider gets it wrong and the IFA has to do work to sort out the problem, but a CMC who sorts out a problem for a client when they have been duped should not be paid under any circumstances – am I getting this right?

    And of course if a client is mis-sold something they are told to sort it out themselves. Well if a problem occurs when an IFA is dealing with something (and I am not saying it’s the IFA’s fault) then the IFA should be compensated? Aren’t they getting paid already and isn’t sorting out the issue something called ‘customer service’? Oh yes, sorry, the client only paid you to do with the first bit, they aren’t paying you to finish the job!

    To take this to it’s logical conclusion all CMC fees should be paid by banks, loan companies and (on the very rare occasion) the IFA where a product has been mis-sold. All a CMC is doing is sorting the mess the Bank or loan company made in the first place, which is exactly what this article is suggesting IFA’s should be compensated for isn’t it?

  20. I agree completely with Rich on this matter, complaints should not be lodged for the slightest reasons, and there does need to be give and take as errors happen on both sides. However, I had a recent case with Phoenix where they had not replied to an initial information request because they had just overlooked it. When I telephoned to find out what was happening I was told to lodge a complaint otherwise they would not be able to give it priority attention. I did not want to complaint I just did not want it to go to the bottom of the queue. So I had to lodge a formal complaint which I did with the person I was speaking to. A couple of days later I received a telephone call from Phoenix about the complaint and was asked what the complaint was about and which client did it refer to. The mind boggles!

  21. It is very much a 2 way street and I know we have made mistakes too. So we are talking about extreme cases when things not only go wrong, they go badly wrong. Pension Trustees also annoy us but in the last case a quick conversation with his line manager, an apology to him for having to go above his head to make it clear what we wanted made life so much easier thereafter. Patience and a bit of man management thrown in works wonders and can avoid the need to get nasty.

  22. IFA’s currently receive commission and as of next year will receive an adviser charge – what’s the problem here, they get paid for the work they do?

  23. Anonymous – if an IFA has to do additional work as a result of an error by a provider then surely they are entitled to receive something? Or should they factor this into the adviser charge payment they receive from the client initially??

  24. I wonder how advisers would react if providers started asking them to pay for any extra work generated as a result of THEIR errors?

    Not well I imagine, not well at all….

  25. Paul,
    Agree, I’d like to see fair compensation for all parties involved, but how might that be achieved? As stated RDR means IFA time needs to be accounted for, I know most providers would treat a thoughtfully prepared invoice more favourably than a broad complaint letter which also includes a request for compensation. Professionalism and presentation win out.

    Rich is right about cost drivers, providers can’t afford to employ highly qualified front line staff, eg call centres, and that’s where the kind of mistakes already described such as handing out the wrong form get made. Ironically the most experienced staff are on the complaints desks! I don’t think RDR preparations have considered compensation claims, but can now see they could increase post RDR.

  26. This is not just a simple case of Administration error, as I could forgive that, as we all make errors and indeed we have forgiven Co-funds on a number of occasions when they have made some.

    I would encourage people to read the nature of the complaint as this was really serious, as it could have resulted in the client losing £15,000 of tax relief and caused real reputational harm to myself. After all if I haven’t been able to successfully prove that co-funds were at fault the claim would have been against my PI insurance and I would have had a deeply unhappy client. After all reputations are hard to win and easy to lose.

    I could go into an awful lot of detail about this case but I don’t think it’s fair on Co-funds, as I hope that this is an isolated situation and they did eventually fully compensate the client, which made the client very happy.

    What has made me so angry in this particular case and I do have many others I could quote from other providers is the fact that providers seem to think that we are their employees when in fact we are their customers.

    The regulator states that financial organisations should treat all of their customers fairly. I think this is the main point I am trying to make that product providers need to realise that IFA’s are actually their customers and when the mistakes do occur they should compensate us accordingly.

    Just by having a terms and conditions stating you do not pay compensation brokers/IFAs when you make mistakes does not dissolve you from responsibility especially when it was not disclosed in advance of me placing business or the fact that it is not easy to find on their website. I ALSO HAVE NOT SIGNED these so called terms and conditions. These terms and conditions also seemed to be in contrary to the FSA Principles of treating customers fairly and information to the customer. Maybe that’s one for the regulator to check.

  27. To Anonymous | 14 Jun 2012 3:48 pm

    Providers need to start to realise that we are the customer and treat us accordingly if that means increasing the level of service and standards within their own firm and surely that’s a good thing.

    Customers make mistakes and it’s good firms that help their customers- not tried to blame them!!

    Companies who provide a service should always concentrate on providing an excellent service not criticising customers.

  28. @Andy Newman How to achieve a fair settlement is something we can debate at the round-table and in the pages of MM. Would industry guidance or standards be helpful? Give me a shout if you want to come along.

  29. paul Newman

    yes please you can get my contact details from

  30. On the basis that the alternative (“overcharging” to create a buffer fund just in case) is undesirable post RDR, it follows that an IFA would need to be paid for “excessive” and unexpected rectification work by somebody.
    So, perhaps providers en masse should now quickly clarify whether and how they will compensate a client for any costs he/she incurs for extra work their IFA has to conduct in such circumstances. It may logically even become information pertinent to the recommendation in the first place.

  31. During my time working at a provider I’ve seen requests for compensation but never any suggestion an IFA would ever actually pay for their own mistakes. Irrespective of the time and cost to the provider.

    In fact often IFA’s refuse to acknowledge they have ever made a mistake. They just quietly let the matter drop, but still expect the provider to sort the problem out for them.

    Providers should be seen as customers of the IFA as well. It’s true that providers need to treat both IFAs and end clients as customers and there should never be an excuse not to strive for excellent service. But mistakes happen. It’s how you deal with them that can set you apart from the competition. That goes for IFAs as well.

  32. To M Smith

    I agree with you that we should all be striving for better standards and errors do occur but there are degrees of severity.

    The fact is that providers do not treat IFA’s as customers and unlike any other profession IFA’s have to deal with many different application forms and processes, so errors do occur on occasion. You really have to get away from thinking that we are employees we are not! We are the CUSTOMERS and therefore providers need to start to realise this and change attitudes accordingly.

    Post-2013 will see a very different world as providers will not be able to enhance commission amounts to attract business from IFA’s, it will be totally based on customer service. There’s that word again customer service -hopefully if I repeat it enough providers may start to take the hint.

  33. Many sensible comments in this thread. For me, there are six main points:
    1. given the millions of transactions each year, even a tiny percentage going wrong will equal a large number whether the fault of customer, intermediary or provider. Most are resolved quickly and the cost should be absorbed by the provider’s normal service/admin fee and the adviser’s trail/adviser charge.
    2. If the error involves financial detriment to the client, usually the amount is quantifiable and the client should be restored to the position as if no error had been made. Most providers (and I assume advisers) already do this as policy.
    3. You cannot mix and match compensation, i.e. it’s simply not reasonable to suggest that a client should use compensation intended as restoration, to pay an adviser’s time-cost claim against a provider.
    4. Any kind of industry”standard” or “menu” of penalties is not practical. It would lead to even more frivolous claims on providers’ desks than occurs today. Also it couldn’t be one way – why shouldn’t providers charge £10 for an ISA app with no NI number, £35 for a dealing error etc? The whole thing would be counter-productive.
    5. Occasionally providers will make an error (and these usually start as a small error which is then compounded by more errors through the supposed correction procedure) that become impossible for the provider to untangle without considerable time and effort on the part of the adviser. Providers have to be reasonable here and accept that there are instances when paying compensation is the right thing to do.
    6. I have no problem with a provider having a policy not to pay compensation, provided they will override that policy in instances where it is only fair to do so.

  34. Matt Worthington 15th June 2012 at 5:29 pm

    R.E. Andy Newman, 12:38

    I wrote the post about call centres that you’re referring too, but I’m afraid I don’t agree with your comments. In my time in a providers call centre (and later on, my time in their complaints department) I encountered many IFA’s who had to devote an unreasonable amount of time to dealing with errors made by our company. Of course, IFA’s make mistakes too, but they tend to be rarer and less significant, as opposed to the catalogue of monumental blunders made by certain providers.

    In my time on both sides of the fence, I have not yet encountered an incident where it would be reasonable for a provider to claim compensation from an IFA.

    I’m 100% behind the idea that advisers should be able to claim compensation from advisers – but only in genuine circumstance (and this could be difficult to assess).

  35. Paul,
    lots of good debate on here and a kind offer, but I’m neither senior enough or been on enough Press & PR courses to be allowed out of my box! (Hi Matt, how is the new career going?)

  36. to help provide some balance to the thread…

    I also work for a provider and have seen staff running around trying to solve IFA cockups (yes there are genuine cockups too!)

    Whilst readers of MM are probably skewed to the more professional in the industry – it would certainly be an eye opener to many of the readers here if you could see some of the nonsense that some IFAs cause.

    One benefit of RDR, I suppose, is that many will be weeded out one way or another,

  37. Matt Worthington 19th June 2012 at 10:16 am

    @Andy Newman
    Hi Andy, it’s going really well thanks, loving it in fact. Shame they’re not going to let you “out of your box” for the MM discussions, because your posts on this were interesting and made some good points!

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