One of the things that raise my hackles is being stereotyped as a crook. A comment piece in The Telegraph by Richard Evans, "Don't trust your financial adviser the way you trust your doctor", is one of those times as “financial advisers” are described as
“utterly unscrupulous purveyors of financial snake oil”.
Such people do exist and I have done my bit as a compliance officer and reporter of scams to the authorities to get them away from the public, but both Mr. Evans and the general public need to understand where the lines of regulation lie and the limits of consumer protection.
Are they really regulated?
Firstly, we need to separate between regulated and unregulated advice; just calling someone a financial adviser does not make any distinction. The only job title that clearly suggests regulated financial advice is “Independent Financial Adviser”, as this is a restricted term in law, like Chartered Accountant and Solicitor. Anyone can put up a plate and call himself or herself a financial adviser, wealth manager, tax consultant, accountant, or legal adviser as the title has no protection in law.
If you want that extra protection in law you need to take the extra step; go to the relevant professional body and confirm that the person you want to talk to is registered and recorded as working for the company you want to do business with. For a financial adviser, (including an independent financial adviser), you need to check the Financial Conduct Authority register and confirm name, status, and full contact details. If there is any variation, then be very cautious, (or better still run away screaming!). https://register.fca.org.uk.
Putting my name into the FCA Register general search today, (07/10/2015), brings up six potential matches, only three of which are active and one of them has my full name. Clicking on the hyperlink for my name shows that I have a CF30 Customer Controlled Function, (the one you need for advice), and I am registered at The Martin-Redman Partnership LLP. Click on the firm hyperlink and it gives an address in Bury St. Edmunds, shown on the back of my card as our Administration Centre.
I have now proven my bona fides to the level I believe you should for any financial adviser you may wish to use!
(For an accountant, you will need to go to the relevant professional body, http://www.icaew.com/en/about-icaew/find-a-chartered-accountant or http://www.accaglobal.com/uk/en/discover/find-accountant.html; for a solicitor, you need to check with http://solicitors.lawsociety.org.uk, ultimately the Solicitors Regulatory Authority).
What are they trying to sell me?
The next big risk factor, once you have established who you are dealing with and their regulated status is what are they trying to sell you? Regulated financial advisers should only be offering for purchase retail financial products. These will be familiar things like:
Mortgages (with permissions)
Stocks and shares (with permissons)
Retail products offered by UK registered Banks and Insurance Companies
You will notice that this list does not include tax mitigation schemes, loan-back schemes, palm oil or carbon credit schemes, small parcels of land, leases on car park spaces or hotel rooms, development money for foreign hotels, forestry plantations or time shares on Mars! All of these are “Unregulated” and outside of normal consumer protection.
If a regulated adviser has been stupid enough to sell a consumer an unregulated product and it fails to perform, then it is likely that the client may have recourse to the Financial Services Compensation Scheme and the Financial Ombudsman Service, but I would not pin your hopes on it. Remember, as a generalisation, regulatory protection will only apply to regulated products; the clue is in the name!
Our company ethos, (Martin-Redman Partners), is that no client should need to go outside the regulated arena to meet their financial planning needs. Unregulated products do have their place in the financial world, but we will not promote them and we have not yet met a client who really needed one. For us, ethics is not a county near to London and “The Wolf of Wall Street” is not a training film.
If you would like to know more about how we can help you plan and realise your financial goals then contact us at firstname.lastname@example.org or call us on 01223 792 196.
The information contained is for guidance only and does not constitute financial advice. It is based on our understanding of UK legislation, whether proposed or in force, and market practice at the time of writing. Levels, bases and reliefs from taxation may be subject to change. Accordingly no responsibility can be assumed by Martin-Redman Partners its officers or employees, for any loss in connection with the content hereof and any such action or inaction.