Advisers warn against 'anti-TCF' Letters of Authority

Anti TCF letters of authority

Another example of TCF being a unilateral concept. While IFAs embrace and promote TCF as part of their client proposition providers continue to ignore TCF as they realise it will cost them money. It is no surprise that the worst offenders are the 'zombie' companies and one wonders what role they will have post RDR.

Posted by: Duncan Jones

Looking in the wrong place

It is understandable that these extra costs will be passed on directly to clients instead of being subsidised by 'big cases'. It is what the FSA are after too. However, how can they argue that they cannot interfere in a commercial arrangement between a provider and IFA yet interfere endlessly in the commercial arrangement between the IFA and client - mainly in forcing the latter to incur more and more cost for less and less benefit? It is not uncommon for several LOAs to be sent out and the info from the first to reply is out of date by the time these legacy laviathans deign to reply having first tried every trick in the book not to. And don't even get me onto the blatant protectionist, restrictive and non TCF 'data protection' practics of the lenders.. Yet the FSA are obssessed with matters like bundling and unbundling of platform charges where we are looking at a few bps in charges, and unbundling will obfuscate matters further. The costs of appalling service standards in this industry will impact the public far more than having a single bundled charge rather than a confusing list of charges, discounts, rebates - which they will then want totted up to come up with........ a single overall cost (aka bundled).

Posted by: Bill C

Do the FSA understand the law let alone TCF?

Of course they don't, that's why they ignore common law in the longstop. Could it be that they are talking out of their ar** on yet another issue? The RDR is supposed to be aimed at removing (the perception) of provider influence due to commissions. IFAs argue and we are treated as if we are agents of the client when we are accused of getting something wrong. If we are agents of the client, the old "agency arrangements" with providers should not exist post 2013. Many banks as lenders, including Santander/Abbey include in their mortgage terms that the client appoints them (without even a signature)a limited power of attorney and the big boys expect people to honour this unsigned GPA! Because of the refusal of some providers to treat us as agents of the client, using the Abbey example, we have taken the unusual step of amending our Client Agreements so that it is not just an LOA, but the client appoints us under a general power of attorney, limited to the provision of information only. In law therefore, as our client's attorney, we are them as far as the law is concerned when requesting information, So for this "unnamed" FSA spokesperson to say "LoAs are a commercial arrangement between provider and adviser and it would therefore be wrong to interfere" any reasonable person could conclude they are speaking complete rubbish. It is NOT a business issue for the provider, only that if the truth is out, it will often be found that the product the client has is either no longer suitable or may well not have been i the first place! It is a legal right the attorney has to information as if they were the client and the FSA to defend them on commercial grounds is ludicrous. Can I suggest Alison, that bearing in mind you have the names of firms like Informed Choice and mine quoted either in teh article or feedback who either imply or clearly state the FSA spokesperson is talking rubbish, you go back and get them named on the record of saying that a client does not have the right to appoint anyone under a general power of attorney and expect it to be acted in when dealing with financial services issues and we'll see what happens shall we! This regulator gets worse by the day. We here named persons when they get it right (enforcement) and they don't have the balls to stand up and be counted by name when they are probably wrong! No wonder the FSA is rapidly loosing ANY remaining respect from IFAs and don't think changing your name will change what we think of you!!! Pratts defending poor TCF of providers which could be legally challenged let alone breach TCF and doing the reverse with small firms...

Posted by: Phil Castle

Common sense please gentlemen

This is not an FSA responsibility to legislate the detail, it is insurers problem to justify under TCF if asked by the regulator. I personally don't see where the issue on all of this is in relation to fax's etc. I for one, as someone who has written several data protection manuals whilst being a practising IFA, would never accept a fax of a clients signature from a third party firm of whom I had no knowledge. 10 seconds in Adobe Photoshop and you can add a copy client signature to any document which would look real on a fax and false on an original. It needs to be verified. I wonder how many of you would be happy to accept a faxed authority to give all of your own client data to a 3rd party IFA who rang asking for them. I suspect under those circumstances you would probably be asking for an original. Equally, would you accept a fax from a client of their money laundering ID? I doubt it. An original signature on a paper based instruction is not in the least bit unreasonable.

Posted by: Mike Inkley

Correction

For the record Alison I do not recall criticising the FSA regarding this issue. Also my surname is Gallacher not Gallagher.

Posted by: Scott Gallacher

Faxes and originals

There have been some very valid points all around but Mr Inkley, whilst I accept your, perhaps 'paranoid', points I do often find it difficult, when asked, to differentiate between an original LoA and a copy of the original and thus often wonder whether providers have special machines to differentiate between the two and if they do who ultimately pays for them. I think one has to accept in this world 99% of IFA practitioners are honest and provide a very decent service for their clients and in my view it is wrong for those IFAs and those clients to be penalised both financially and in terms of effort, time and stress for the sake of those 1%. I am sure there are those people who will argue differently but I am afraid that is where I find this country is increasingly going wrong by devising and accepting convoluted systems over common sense and common decency.

Posted by: Jefroc

Not only LOA but also Agency Transfers

My former IFA network went into liquidation last year and since then, I have joined a new network and have been attempting to novate clients over individually with letters of authority and agency transfer letters signed by each client. Bulk transfers are not permitted, I am told. After 6 months, I have decided that this is an impossible task due to unbelievable provider inefficiency and (dis)re-organisation and have now decided to leave the Industry after 20 years of loyal service to my clients (without one complaint). THE INDUSTRY IS CLEARLY IN A STATE OF 'MELT- DOWN', SO WAKE UP!!!

Posted by: John D Hooper

LoAs

As a result of RDR I now cost each LoA and if it passes a base (or standard) cost of £500, I start to flag it and go back and review where we are. It is frightening when you think that we have a had to set a standard cost of £500 for what is essentially a letter or a fax and a change to the provider data base. You can imagine my surprise when a recent and very simple LoA took about £1,200 to process both in actual costs and 'lost' administration and client facing costs. And all because the Provider started to tell 'porkies' about the client's holdings! This was not a legacy Provider but one of our current (albeit major) ones who advertise their high level of service and seem to win medals every year from whoever, the Adviser community I suppose!

Posted by: Additional1