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Backstage with Keith Richards – 23 February

Blog

Publication date:

23 February 2021

Last updated:

18 December 2023

Author(s):

Keith Richards

Call to action for all members…sign up to the Financial Vulnerability Charter!

The events of 2020 have led to a startling rise in financial fraud, with clone investment scams up 29%, according to FCA data released in January.

The FCA has also issued guidance regarding the fair treatment of vulnerable customers which is both timely and represents an opportunity for the profession to unite behind its own independent Financial Vulnerability Charter.

Whilst FCA have focused on vulnerable customers, our consumer guide and aligned charter focuses on the vulnerable circumstances we all face. The rise in fraud during the pandemic highlights how vigilant the public needs to be when making significant financial decisions under unusual circumstances.

Despite the Bank of England’s bullish prediction of an economic bounce back, the true impact of Covid is not yet fully realised, so consumers must be extra careful when undertaking long-term financial commitments.

Seeking extra guidance or professional advice is crucial and, I am pleased to say, is being acknowledged by policymakers. In circumstances such as these, clients can feel the benefit of a financial adviser relationship, but it must also be a priority to build on trust in the profession as a whole.

Trust is the single most important factor to determine our ability to best help society because public confidence has a direct impact on public engagement. So it is vital we all take action to be seen as a trusted adviser — a safe pair of hands.

To work towards this goal, we have launched an independent Financial Vulnerability Taskforce. Its aim is to promote greater understanding of vulnerable clients and encourage appropriate behaviour through the sharing of good practice, while also addressing the expectations of both regulatory standards and the public.

To attest to these commitments, advisers will be able to sign up to a charter comprised of nine core consumer guide pledges. This will give access to experts plus a resource library containing information on the latest scams targeting vulnerable clients, the latest regulatory guidance and links to agencies that can assist clients at risk of abuse.

By collaborating in this way, we can also build upon the benefits of a united profession that agrees on the principles of both good practice and high professional ethics.

The more united we are behind transparent and consistent standards, the more we will be trusted as a safe pair of hands. The current regulatory focus on vulnerability provides a timely opportunity to change public perception through the way in which we consciously deal with those in vulnerable circumstances and address perceptions of commercial conflicts of interest, while also addressing barriers to engaging advice.

Last year brought many challenges and, in general, the sector demonstrated its key role and stepped up to those challenges. The need for greater access to financial guidance and advice is back on the agenda as an essential strategy to combat the public’s increasing vulnerability to scams and also help the country bounce back. We must take this opportunity to be the safe pair of hands.

Please do take a few minutes to learn about our Financial Vulnerability Taskforce and to then register your support.

Supporting your wellbeing

The coronavirus pandemic has heightened awareness around the wellbeing of you and the people around you – both professionally and personally.

The Personal Finance Society is committed to support your wellbeing and I encourage you to take a moment to visit our new Wellbeing Hub.

It brings together articles, videos, webcasts and more in an on-demand format to help you, your team and your clients through these difficult times. It also signposts the valuable work we are doing around financial vulnerability, and I’m delighted nearly 400 of our members have already registered their support.

Reasons for exiting pension transfer advice market revealed

A survey of 1,049 Personal Finance Society members has revealed why many no longer offer defined benefit pension transfer advice and why those who do have had to increase the fee they charge clients.

It will come as no surprise to many of you that the defining reason is the cost of obtaining professional indemnity insurance. 95% of those polled said the price they pay for professional indemnity insurance had increased in the last five years, while two thirds said the cost of professional indemnity insurance has increased by more than 25% in the last five years.

I am sorry to say access to affordable defined benefit pension transfer advice is likely to get far worse for consumers unless we see some sensible government intervention soon and the increased risk exposure where PI cover for past DB advice has ceased will compound the already unsustainable FSCS costs for all.

The current method of funding consumer compensation is unsustainable which even the government and FCA have acknowledged recently. We continue to call for government intervention before the number of people struggling to access pension transfer advice at a price they can afford grows even greater and the evident wider impact gets worse.

PFS to improve diversity of profession with apprenticeships

I am excited about the plans we have to improve the diversity of the financial advice profession – by introducing a new diversity and inclusion requirement for employers who use the Aspire apprenticeship scheme.

Since Aspire launched back in 2017 more than 500 registered firms have signed up to the programme, which offers structured training to apprentices so that they can achieve the necessary qualifications and skills required to become a fully qualified financial adviser or insurance professional.

More than 1,500 apprentices were enrolled in the insurance and personal finance professions in 2020, and the Personal Finance Society has now teamed up with the Education Skills Funding Agency (ESFA) to further promote the benefit of Aspire.

It is vital that our profession progresses its commitment to be an inclusive society and additionally reflects the diversity of the clients who benefit from receiving financial advice, which is why we have taken this step to ensure careers are accessible to people from a comprehensive range of backgrounds.

Best Wishes,

Keith

 

This document is believed to be accurate but is not intended as a basis of knowledge upon which advice can be given. Neither the author (personal or corporate), the CII group, local institute or Society, or any of the officers or employees of those organisations accept any responsibility for any loss occasioned to any person acting or refraining from action as a result of the data or opinions included in this material. Opinions expressed are those of the author or authors and not necessarily those of the CII group, local institutes, or Societies.