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Adviser Workshop: How to blow the whistle on wrongdoers
by Michelle Abrego on Nov 12, 2012 at 13:22
James Marchant (pictured), Phil Billingham and Andrew Peters describe their experience of reporting cases of misadvice and fraud to authorities.
Director, Sovereign Independent Financial Advisers
In June I was referred a client by an accountant who was very concerned about the advice his client had been given on pension transfers.
The advice was to move a fairly modest pension pot with a guaranteed annuity rate into a very expensive Sipp and then invest 100% of the portfolio into unregulated collective investments schemes. Upon reviewing this, so many alarm bells went off. I met the client and warned him not to transfer. Fortunately, he took my advice.
But I thought the advice firm that had advised him, which was a UK regulated firm, was wrong. I contacted the Financial Services Authority (FSA) via its email address for whistle-blowers, email@example.com, and provided the information. The regulator acknowledged my email within three or four days. Then someone rang me and said they might want to talk to me about this. They called and asked me a few questions, which encouraged me that they were interested.
The firm in question was directly authorised but was running a non-regulated firm alongside it. The main company seemed like it was reviewing the pension, while the unregulated arm was giving the investment advice. Although there were two companies, the advisers had their feet in both camps.
It wasn’t just the unregulated firm situation: the advice given was contrary to all the FSA guidelines on pension transfers, and the client had been advised without any concern for costs to invest in a Spanish property scheme. It was going to cost 6% to transfer. The client was not a sophisticated investor: he was a tradesman with £40,000 invested.
[Given a chance to blow the whistle], I would do it again. As advisers, we should all be reporting this sort of stuff to the FSA because when it all goes wrong, we will be paying for it through the Financial Services Compensation Scheme. It’s in all our interests to work together on these things to, hopefully, drum some of these cowboys out of the industry.
Operations director, Perceptive Planning
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