Firms offering 'lay advocate' roles to unqualified individuals after 2012 have been warned by the FSA to make sure they do not stray into regulated advice territory. Here's what you had to say...
"I can understand why firms would want to offer this role and why some existing IFAs would be interested. But it poses massive regulatory and compliance challenges. How would firms ensure individuals in these roles never stepped over the ‘advice line’, particularly where they are continuing to work with existing clients?” Martin Bamford
“Firms offering this will be exposed to claims by clients against the old adviser. The firm might be able to protect itself by adding a clause to its client agreement accepting responsibility for advice given by certain named individuals.” Green Eyed Monster
“Comments like these show in high definition how strangled IFAs feel by regulation. We daren’t have a decent idea that, God forbid, leads to further profit without inventing compliance problems before even testing it out! Clients aren’t always little lambs to the slaughter.” Stuart
“Provided that the ex-adviser is careful in making sure they operate only within the remit of their new role, and that advice is never given, this can work.” Anon
“Regulatory issues aside, what’s in this for the client? Any client with a half-inquisitive mind is going to ask: ‘What is this additional mouth costing me to feed?’ That extra bum on a seat isn’t actually free, and if it cannot actually give any advice, is there real benefit?” Dennis Hall
“The problem is many retiring advisers don’t know whether their clients will get the service they deserve at a fair cost. To just leave clients, fingers crossed, with a new adviser isn’t enough. I need to gradually introduce them. They need to feel comfortable and reassured they are in safe hands.” Anon (IFA of 40 years)
"I know of several IFAS who will not be taking exams and who are pinning their hopes on such an arrangement. To make matters even murkier, they are presuming that they will be able to give ‘non-investment' advice and still take commission (term assurance etc.). The solution is actually quite plain: Those that are de-authorised have no choice or say in the matter. If their clients require ongoing advice there is no option but to go to an authorised adviser, be they restricted or independent, and both will have to have attained Level 4 and charge fees. Any ducking or weaving round this issue will, I feel, be heavily stamped on by the regulator." Harry Katz
"Why call this role something as abstract as 'lay advocate'? Surely 'relationship manager' or something like that is more understandable. Lots and lots of ex-advisers will do this. Wouldn't it be possible to fully explain to a client, face-to-face and in the presence of their new adviser, that their old adviser is no longer permitted to give advice, will not do so, and that nothing that is said or done by that person constitutes advice?" Anon
"Everyone is focusing on the issue around former advisers who are unqualified at Level 4 accidentally giving advice, but what of those who are qualified to Level 4 but are not authorised to give advice, such as paraplanners? I have seen it implied that some are doing all the client contact, including presenting, and that they have also prepared the reports and research too. All that then happens is the authorised person run their eye over it all." Phil Castle
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