Financial advisers are set to face a re-evaluation test from next month by regulatory bodies. This is in the wake of a huge pensions mis-selling scandal.
Financial advisers assessed
An assessment aimed at raising the standards and competence of financial advisers in the UK is to be rolled out. The Chartered Insurance Institute (CII) will make it available from 1 October 2018.
The optional tool was created in collaboration with the Financial Conduct Authority (FCA). It is called the ‘Regulated Retail Investment Adviser Re-evaluation’ test of the level 4 Diploma in Financial Planning.
Firms will be encouraged to use the test. The FCA has also stated that they may use it as a supervisory tool. Firms may be asked to retest specific advisers.
The FCA and CII jointly stated: “We believe that advisers having a good level of knowledge is the foundation to giving sound financial advice.
Mis-selling scandal
The self-invested personal pension (Sipp) mis-selling scandal is threatening to cost advisers millions in compensation payouts. Unscrupulous advisers convinced people to place their money into Sipps.
However, many of the schemes pensions were invested into were unregulated and unsuitable for the client’s needs. As a result, they were left out of pocket because schemes that have gone bust or the chances of getting the returns promised where oversold.
One of these schemes is Ethical Forestry. We are currently involved in litigation against Liberty Sipp and Guinness Mahon over this scheme. The scheme was sold to clients and promised high returns for very little risk. However, a hurricane destroyed the plantation. Following this, the company was forced into liquidation. As a result, clients have lost millions and we are fighting to get them their money back.
Financial advisers
Financial advisers looking for an easy way to make commission are at fault for the losses. This is why regulators are looking for ways to ensure advisers are completing due diligence as well as upholding their duty of care to their clients.
Many advisers chose to withhold information on a client’s investment, therefore making them purposefully at fault for the mis-selling. However, some did not hold the level of knowledge on a Sipp to provide clients with vital knowledge, leaving their finances vulnerable.
The assessment will allow advisers to prove their competency level to do their job. If people are found to be operating below the acceptable level, firms have a responsibility to clients to educate employees.
However it could be too late for people who have already moved their pensions. If you think you’ve had bad advice, even if you haven’t lost money, we can help.
Get in touch with our team of legal experts for a free no obligation consultation.