The managing director of James Hay has apologised to ex-Honister advisers for a ‘heavy handed' letter sent direct to their clients indicating they could appoint a new adviser while theirs awaited re-authorisation.
The letter, sent to all ex-Honister clients with a James Hay product, stated Honister had gone into administration.
It said the client could wait for their adviser to be reauthorised or could find another adviser. It also included a form for clients to apply for a new adviser.
Honister entered administration two weeks ago after failing to secure professional indemnity cover, leaving 900 advisers and about 300 firms unable to give authorised advice.
The letter has angered Gareth Nelson, an IFA for Sussex-based firm Allen Charlton, who was forwarded the letter by one of his clients.
He said: "I don't mind providers writing to clients to inform them of the situation, but James Hay has gone one step too far.
"At a time when we advisers are working very hard to maintain consistency and confidence with our clients as we get reauthorised, this letter is inappropriate.
"Clearly, we do not want to lose clients during this process. To attach a ‘change of adviser' form is an insult to our firm."
In response to Nelson's comments, James Hay managing director Tim Sargisson, said: "It had not been the intention of the company to alienate the IFA community bearing in mind that 90% of our work comes from this group."
He added: "This is a situation that is outside and beyond our control and we're trying to manage it as best as we can.
"If the letter comes across as heavy handed, I can only apologise for that.
"However, we need to think about what the FSA would expect from us in terms of managing clients interests and expectations.
"We have a duty of care towards clients who have a SIPP with us and need advice while these ex-Honister advisers are trying to get reauthorised.
"Either we sit on our hands and do nothing and get criticised by the regulator for not telling these clients what to do, or we go the whole hog explaining what needs to be done in cases where these clients need advice immediately."
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