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