Advisers beware!

February’s fine for Trigon Pensions Limited marked the beginning of the FSA’s assault on financial advice for 2007. The regulator seemed to spend much of last year expressing concerns about the quality of financial advice received by consumers, notably in its Treating Customers Fairly Papers. Now, it seems to have opened the hunting season for advisers. Adam Samuel who reported the TCF material for Compliance Monitor would far rather put right some of the problems faced by IFAs and portfolio managers before they turn into complaints and enforcement problems. Here is his account of where the major problems are likely to show up in the coming year.

Adam Samuel Dip PFS, LLM, barrister and compliance consultant can be contacted on tel 020 7435 2620; email AdamSamuel@aol.com, web-site www.adamsamuel.co.uk His book, “Complaints and Compensation: a Guide to the Financial Services Market”, is available from www.cityandfinancial.com and www.adamsamuel.com.

Be an adviser – not an order-taker

The first area where advisers let themselves down is not understanding the nature of advice. Advice is not about helping people to achieve what they want. It is about advising them to do what is best for them. Certainly, the customer’s hopes and aspirations are central to this process. However, helping a customer do something that is likely to damage their financial health is irresponsible. It also leads to complaints. An IFA was upset when the Financial Ombudsman Service (FOS) ruled against him over his selection of an equity portfolio for a customer who wanted such a thing for his money while he looked for a property to buy. A real “adviser” would appreciate that investing money in equities that could be needed at any moment to buy a property was not a good idea. He would have declined to do the transaction.