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Watchdog says go to an IFA for free review

The Financial Ombudsman Service has taken the unusual step of recommending a complainant to seek a commission-based IFA to review their case despite knowing the adviser is unlikely to be paid.

The move comes as commission is under scrutiny from the Treasury and regulator.

The case involves a mortgage endowment policyholder who disagreed with compensation offered by Friends Provident and complained to the FOS. The ombudsman agreed with Friends&#39 offer but, when the policyholder persevered, suggested a commission-based IFA be sought to review the case.

A letter from ombudsman investment division assistant manager David Bird says: “May I suggest that it is not unusual to be able to locate a financial adviser who does not charge an hourly fee and who may work on a commission basis. If you sought out

such an adviser you would be unlikely to be charged a fee.”

The client&#39s regular IFA, Surrey-based Informed Choice managing director Nick Bamford, says: “It is not fair for the ombudsman to expect an IFA to do the work with no hope of being remunerated.”

An FOS spokeswoman says: “There are IFAs who would take on a review of a mortgage endowment case knowing they will not be paid commission because they may be able to develop a relationship with the client down the road.”

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