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Should brokers snitch on each other?

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  • 10/04/2013
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Should brokers snitch on each other?
The Financial Ombudsman Service recently revealed that as many complaints about advisers originated from fellow brokers than did claims management firms.

Our Marketwatch column asks when is it appropriate for an adviser to take up a client’s complaint against one of their previous advisers?

This week’s expert commentators are:

Richard Adams, managing director at Stonebridge Group, who says that advisers are best placed to spot underhand activity in the market.

Donna Hopton, director at Cherry, suggests that the majority of brokers in the industry would like to see the bad apples kicked out.

Antony Lark, managing director at Just Mortgages, thinks that advisers need to take care to examine the full range of products a client has before judging.

Richard Adams, managing director, Stonebridge Group

It doesn’t come as a great surprise that financial advisers are just as likely to be reported by other financial services firms as they are by complaint management companies.

This is because not only are advisers conscientious and placing their clients at the heart of every decision they make, but they are more likely to spot genuine wrongdoing than ambulance chasing complaint firms that indiscriminately target individuals regardless of their circumstances, the products they have taken out and how they were sold.

When it is beyond reasonable doubt that an unsuitable home loan has been recommended then it is appropriate for advisers to help their clients with a claim, but it is very difficult to prove after the event in the case of mortgages.

None of us want rogue brokers to operate in the market and regulation has gone a long way to eradicating such practitioners, but neither do we want advisers making spurious claims against their peers at the behest of their clients.

The complaints system as it currently exists is doing an effective job of sorting the genuine claims from the more specious ones, but the onus shouldn’t lie solely with the Ombudsman for regulating such activity.

As a network, we are acutely aware of our role in helping improve quality and weeding out mis-selling and other stakeholders such as lenders must ensure they don’t let their standards slip in the fight to identify poor advice.

Donna Hopton, director, Cherry

Our experience shows that good advisers are as keen, if not keener, than everyone else to see the industry cleaned up and to facilitate the rooting out of advisers who don’t deserve to be around.

So, where the evidence means that a real mis-selling has taken place, we assume they will see no reason at all not to follow up on the matter. They act for their clients who are entitled to expect appropriate redress in legitimate circumstances.

That said, legitimate cases involving advisers rather than banks are rare – hence, in reality this is thankfully not something which often comes up. However, in our view, where advisers themselves choose to follow the deeply flawed CMC type process against other probably innocent advisers, this is simply despicable and unforgivable.

The true extent of camaraderie between advisers is becoming more visible. This is certainly a good thing rather than bad – and one of the great strengths of this is that it helps the industry to improve from within because it introduces an element of ‘self-regulation’.

Good advisers want to help each other – and to get even better – but at the same time, the ability to link the positive forces within the industry is bound to assist the process of weeding out those who are not up to the job.

Those who warrant criticism must be brought to book. However, what does need to be shouted out is that where there is blame, only exceptionally will fault lie anywhere other than with the banks and large institutions who have put the reputations of proper advisers at risk.

Antony Lark, managing director, Just Mortgages

It might seem surprising that as many FOS disputes involving advisers and smaller businesses are referred by other financial businesses as by claims managers.

But if you step back and consider the advice process it’s probably a natural outcome. The first thing a new adviser is going to do is review the client’s circumstances and this will include looking at what provision they already have in place.

Whether you’re changing dentist, hairdresser, builder or financial adviser it’s common to get a similar reaction. At first glance it might appear that criticising the previous provider is just a way to make the new one look good.

But you’re paying the new adviser to review what you already have, as well as deliver what you need now and in the future. A good and thorough review may well throw light into dark corners where unsuitable products are lurking.

Advice should take into account what’s right for the customer at the point of sale but also recognise how their needs may change in the near future. With the benefit of hindsight a new adviser may well feel that the original advice was flawed and recommend that there may be a basis for a claim.

Good advisers are not operating within a closed shop. They won’t be afraid to challenge the advice given by others. Far from undermining trust in the industry, this should reinforce the quality and integrity of advisers and the benefits of independent professional advice.

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