The Financial Conduct Authority (FCA) is looking into the activities of unauthorised pension introducer firms
Unregulated introducers seem to be involved in a number of recent IFA firm failures and Financial Ombudsman Service (FOS) decision notices.
Many IFA firms use lead generators. There are many reputable names that provide client leads, such as Oportura, Unbiased and VouchedFor.
Following the retail distribution review (RDR), many IFAs also entered into working relationships with advisers who had retired or become unregulated, but could still use their soft skills and experience in the profession to find and refer clients to authorised financial planners – perhaps the firm to whom they had sold their clients.
Many introducers do not claim to provide regulated advice, and make it very clear to clients that all they are doing is directing them to a suitable financial planner.
However, regulatory consultants say they are seeing a worrying trend of some other lead generators either failing to make it clear they are not the ones actually giving advice, or contriving with firms to direct clients to specific investments, thereby exposing clients to conflicts of interest, inducements and product bias.
Regulatory consultant Richard Hobbs (pictured below) said: ‘If you look at it historically, when the RDR came into effect, there were a number of people who didn’t bother taking up the level four qualification on the grounds of age. In principle, there would be nothing wrong with them cutting deals with IFAs, becoming introducers and sharing client lists with someone who did achieve level four.
‘There’s no rule against them being paid for that access. But some introducers are stepping across these lines and they can’t do that. All [introducers] can do is hand off. “Introducing” in the regulation means exactly what it does in the common dictionary; you can’t advise.’