Consumer organisation Which? has criticised independent financial advisers (IFAs) for failing to display their fees and charges on their websites. Which? reviewed the websites of 500 advisory firms, and found that 349 of these (69.8%) gave no indication on their websites as to how much their advice might cost.
Whilst firms are required under Financial Conduct Authority (FCA) rules to disclose fees at the start of the advice process, Which? says it would prefer that the client already has an idea of what they are likely to pay before they reach this stage. It says that once the adviser has met the client, the client may be subjected to a “full sales pitch”. The FCA however recommends disclosing fees on the firms’ website as ‘best practice’.
The consumer organisation says that only 2% of the sites gave genuinely useful information on this subject. Of the sites that did make some attempt at explaining their fees, most did not give enough information to give a complete indication of what a client might pay.
Which? also contacted 206 IFAs and found that 12% of these would not disclose their costs even when asked via an initial telephone enquiry. These IFAs also charged very different amounts for the same service – the average price quoted for advice on accessing a £150,000 pension fund was £2,516, but some advisers quoted as much as £7,000 for this.
Which? executive director, Richard Lloyd said:
“Paying for financial advice could be one of the best investments people can make, especially if they are taking advantage of the new pension freedoms, but a lack of transparency on fees could put them off at the first hurdle.
“Good IFAs have nothing to fear by publishing fees online and we believe that if some firms can do it, then the others have no excuses. We need IFAs to be much more open about charges or the regulator should step in and change the rules.”
Leaders of IFA trade associations did not welcome the report. Despite acknowledging that not disclosing fees ahead of the financial review was “like walking into a shop with no prices,” Chris Hannant of the Association of Professional Financial Advisers said Which? was “adding to the sense of fear around going to see an adviser”. He accused them of “damaging consumers’ interests just for the sake of the headline”.
Mr Hannant ended by saying:
“The message you take away from the [fusion_builder_container hundred_percent=”yes” overflow=”visible”][fusion_builder_row][fusion_builder_column type=”1_1″ background_position=”left top” background_color=”” border_size=”” border_color=”” border_style=”solid” spacing=”yes” background_image=”” background_repeat=”no-repeat” padding=”” margin_top=”0px” margin_bottom=”0px” class=”” id=”” animation_type=”” animation_speed=”0.3″ animation_direction=”left” hide_on_mobile=”no” center_content=”no” min_height=”none”][Which?] press release is you shouldn’t go to an adviser because it’s all a bit murky.”
Keith Richards of the Personal Finance Society made similar comments, saying the report “risks continuing to fuel mistrust of the sector.”
The cost of advice is one of the major issues to be covered by the Financial Advice Market Review – the study to be conducted by the FCA and the Treasury – which will examine barriers to accessing financial advice.
The information shown in this article was correct at the time of publication. Articles are not routinely reviewed and as such are not updated. Please be aware the facts, circumstances or legal position may change after publication of the article.