It's Thursday night. You're at the pub with friends. The conversation turns to investing and, when you're asked for your opinion, you give it.
Six months later a letter arrives. It's signed by a friend who was at the pub that night, and a solicitor. You gave faulty advice, it reads, and it's cost them money.
The pub is not, one would think, a wise place to impart financial advice. But you're a qualified financial adviser. So, where do you stand if you receive a complaint like this?
The CII recently issued what it called a ‘thinking' paper on pro bono work in financial services. Voluntary work, it said, should be seen as equally important in the eyes of consumers as qualifications.
But it also said pro bono work is relatively new in our sector compared to others, a line which immediately put some advisers' backs out because they said they do it all the time; in schools, over the garden fence, down the local...
Which got me thinking: what if, after sharing your financial wisdom with friends one afternoon down at The Three-Legged Mare (it exists, in Yorkshire!), one filed an official complaint.
Amazingly, the FSA has guidelines on this. It says an adviser is liable for FSA action if they impart financial advice ‘by way of business'.
To find out what ‘by way of business' means, you'll have to visit the FSA's Perimeter Guidance Manual (PMG).
But here's a handy paragraph, pulled straight from the PMG: "Whether or not an activity is carried on by way of business is ultimately a question of judgement that takes into account several factors (none of which is likely to be conclusive).
"These include the degree of continuity, the existence of a commercial element, the scale of the activity and the proportion which the activity bears to other activities carried on by the same person, but which are not regulated."
Thankfully, the scenario depicted above appears to happen very infrequently. The financial Ombudsman told me it could not recall a single instance of handling an unresolved complaint under these or similar circumstances.
However, an unnamed adviser later told me he had received a complaint from (what had been) a friend following a spot of ‘pro bono' financial advice, but that they had managed to resolve it between them.
Gives a whole new perspective on those friendly after-work ‘meetings', doesn't it?
Scott Sinclair is news editor of Professional Adviser and IFAonline
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