Yesterday the Financial Times reported that the average compensation for steelworkers miss-advised to transfer out of BSPS has fallen by £30,000. This is mainly due to what the FT calls adverse market conditions – the effect of rising interest rates on the calculation of redress. But there is also worrying evidence that redress for the cost of advice is falling as steelworkers are talked into new advisory contracts which look like good news, but have a sting in the tail.
Part of the FOS redress payable by solvent advisers, is against the future cost of advice payable to support the management of the transfer payment and ongoing advice to the client. This is based on the advisory agreement at the time of the redress calculation (e.g. historic payments).
Alarming news is reaching me from my steelworker friends of attempts by advisers to scale back future fees payable to them by their clients. Normally this would be good news, but these offers coincide with the valuation of compensation from these advisers to the very people they have been taking fees from since Time To Choose
An unamed IFA has offered to cover the
My correspondent tells me that Beacon’s client is currently paying £2600 pa for advice. So why should the client suddenly find an offer from a sister company acceptable when a) it is not the service that has been charged for and b)leaves him/her out of pocket to the tune of £2100 x years to retirement (discounted)?
If this was an isolated incident of an adviser trying it on, then it might not have made this blog , but there are other reports
“This” being a software package that helps IFAs model the redress they would like to pay.
Most depressingly of all is this offer
The opportunity to get cheaper ongoing fees comes conditional on accepting reduced compensation for fees already paid.
Just how any of this squares with the new “consumer duty” is unclear. The reason that adviser fees for steelworkers are measured in thousands of pounds a year is because 1% of £350,000 is £3,500 – estimated to be the average transfer value and advice fee (respectively).
This outbreak of seeming generosity is another cynical way for advisers who have offered bad advice to wriggle out of compensation payments.
The rules are straightforward, if you misadvise and then charge for subsequent advice, your bill is based on historic billing , not on what suits you – the advisor – today.
Clearly this is open season on BSPS pensioners and they need to be clear on what is in their , and not the adviser’s, best interest.
Having put up with poor advice in the past, they should not be lent on to accept discounted compensation.
The FCA and FOS should intervene and ask advisers what their motivation for these offers is, and why these offers are timed as they are.
