Transparency? Long-suffering client Richard Harvey reels off a celluloid complaint or two
Tsk, tsk, tsk ladies and gents. We really aren’t sticking to the rules, are we?
The personal finance columns in mainstream media didn’t devote much space to the FCA’s latest review into the industry’s performance on disclosure of fees and costs. If they had, you can imagine the tabloids frothing over with headlines like “Secret Bungs Of The Fast Buck Money Men”.
You’ve presumably perused the FCA’s TR14/6 paper (OK, not exactly a thrill-a-minute poolside read, but if you haven’t taken on board its conclusions, then I’d bet you’re one of the advisers who is in their firing line).
According to the FCA’s findings, around six in 10 firms aren’t being upfront with clients about fees; annual costs, expressed in cash terms, are still conspicuous by their absence; and three out of every four advisers might quote an hourly rate, but omit to say how many hours they’re likely to rack up.
Now, while most clients don’t have the foggiest about the funds, bonds and other investments recommended by their IFA, they do seem happy to trust their advisers to look after their money. And trust is the Big Thing.
La Grande Illusion
So the RDR revolution was all about bringing greater professionalism into the industry, and was firmly on the side of the consumer. While the former objective seems to be on track, lack of progress on the latter means that the poor punter is still none the wiser about how much of his hard-earned an IFA is likely to trouser.
It’s not as if this issue hasn’t been raised before. Last year, the FCA’s Factsheet 007 on “Disclosing your Firm’s Charges and Services” made it quite clear what was required. For many IFAs, 007 was simply “Licensed to Cock a Deaf’un”.
No wonder the FCA’s director of supervision Clive Adamson said he was “disappointed” that so many firms were failing the transparency test – announcing that the Authority would be issuing a video guide to highlight what needs to be done.
One wonders if “Disclosure – the Good, the Bad and the Ugly” will have any greater audience impact than Factsheet 007? (Do you detect a cinematic theme here?).
However, it is unarguable that the industry needs to produce a simple system of answering that time-honoured client question – “what’s all this going to cost me?” It really shouldn’t be difficult.
(Richard’s blog continues next week with some slightly more upbeat cinematic references)