FCA, Annual reviews and Fees
AlbertaNK
Member
Hi Guys, do you know if the following is an FCA requirement/rule? I haven't so your input will be much appreciated.
'For all outstanding policies that have an incomplete annual suitability review, as at 31st October 2019, the ongoing fees associated with that product since the date of the last review will be clawed back from the adviser and reimbursed to the client on a product by product basis.'
Comments
Is that a provider who's set this out?
It is the firm I am working with.
I'm not sure you've explained the situation enough, but it's fair to say that the FCA don't have any regulations that would force the clawback of adviser fees
Yes, sounds like a decision that's been taken at firm level to ensure advisers review their client bank.
We have been trying to figure out what to do with clients who are unable to attend an annual review meeting. The issue being how can you confirm ongoing suitability without talking to them first.
The extreme end of the solution would be to return their fees and disengage them, but a more commercial-friendly use of common sense is probably the best answer: maybe by confirming suitability annually 'based on the information we have' and then a 3 strikes and their out.
It's rare of course, but there are the odd client here and there who you can't get hold of or don't want a meeting for whatever reason.
If the client does not engage (or wishes to delay annual review) we send an "assume (or you told us) nothing fundamental has changed with you so assume all still suitable" letter,
If they fail to engage at second attempt we disengage.
Thanks Sue and Aaron. It is a little bit confusing at the moment to be honest. Initially they said we should contact them on three separate occasions using a different medium where possible and if there was still no contact made, we should audit the attempts and still retain the fees including pre-RDR comm. Suddenly, they are giving the advisers till 31 October to conduct them otherwise they would claw back all the remuneration since the last review.
In my last company, we sent reports based on what we had if the client was not available but I guess different firms have different rules. Thanks for the input though, I just wanted to confirm if it came from the FCA as advised by the firm.
Hi Jona, how long would you wait before contacting them again? Thanks
I think @Jona is referencing a 2 year period, which seems fair.
I think repaying fees is wrong (up to that point you're not to know a client is going to go AWOL). Also 1 year time frame is too low. What if the client (who tend to be of a certain age) is in hospital or for some other reason happy to just roll things over to year 2?
Our strike out would be after year 2 and no response, not in the first year. We are seeing more and more disengagements with clients though, particularly at the lower end.
Perfect! Thanks guys.