Back once again with the predictably ill behaviour, here I am again and thanks to Ben for keeping the seat warm last week. Thanks to everyone who’s been nice about Regenerate and for those who’ve asked about videos of the sessions (the FCA’s Kate Blatchford-Hick’s session in particular) we’re nearly finished mucking about with them and will start putting them up on the lang cat’s YouTube channel very soon; keep checking back. We’ve also optioned King’s Place again for next year as we liked it so much this time around. 

Our theme this week is something Ben touched on briefly last week, and that’s ongoing remuneration and service. There’s nothing more emotive for firms than someone having a go at what you charge, and the comment sections have filled up with “butbutbut” and whataboutery with quite some velocity. 

The questionnaire the FCA has sent out is to 20 of the largest firms in the land. It’s worth remembering that the regulator takes a risk-based approach and it absolutely follows that the greatest risk of fee-for-no-service is in big firms with lots of clients, often bought in from back books or other adviser businesses which may or may not be very tightly run. So a good place to start, no?  

We’ve seen a copy of the questionnaire, and it’s very simple. It asks for three datapoints:  

• Number of clients due a suitability review as part of your financial advice ongoing service 
• Number of clients who received a suitability review as part of your financial advice ongoing service  
• Number of clients who paid for ongoing advice but whose fee was refunded as the suitability review did not happen 

This needs to be provided for each year back to 2017.  

You know that sense of fear you get when kids ask awkward but very simple questions, such as “what’s this thing that I found in your special secret drawer?” This is one of those. The temptation is to answer “all, all, none” but of course that’s not going to cut it and I suspect many of you reading this would struggle to come up with accurate data; you might take this as a spur to make sure your record-keeping is all shiny and oh so bright and that you can get this kind of data readily out of your practice management system.  

That’s a preventative measure; for now these disturbingly simple questions are for those few big firms to worry about. But it’s worth just considering for a moment whether this has the potential to go further; the questionnaire makes it clear that this is a fact-finding exercise at the moment. But what that means is that if systemic issues are uncovered then we can expect to see a whole heap more in this area. 

When we put up the video of the ‘from our own correspondent’ session at Regenerate you should take a look as it features folk with first-hand knowledge of the Australian fee-for-no-service Royal Commission and also the USA DoL fiduciary reforms. For now here’s a wee taster and it’s food for thought. 

A couple of other thoughts. Ongoing service can take many forms, and we should, as I keep telling the lang kittens, read the farking question. The words used are “suitability review”, not “face-to-face meeting” or “given a big annual review pack”. I’ve heard from a few advisers on this who’ve pointed out that ongoing service includes things like ongoing PI cover, FOS levies and so on and that’s entirely reasonable. But Consumer Duty requires that suitability is an ongoing endeavour if money is changing hands, so those basic ongoing costs can only be part of the story. And if you divide your PI and levy bills by the total number of clients, I suspect it doesn’t add up to your 0.75% or whatever it may be. 

If a client feels like they’re getting service they likely are. Most IFAs I know are assiduous at making sure client outcomes are looked at regularly, albeit in lots of different ways. But there remains the filing cabinet problem – many firms (no, not yours, you’re perfect) have a back book which throws off some revenue but doesn’t get the love that their active book enjoys. You wouldn’t think dragons could fit in filing cabinets, but there they are, blowing wee smoke rings and just waiting.  Nearly 80% of IFA income is recurring. But it can’t be passive. Keep a close eye on this one. 

And your music choice? We need brutality this week, so here’s the new one from Norwegian legends Borknagar. I know how much you like Borknagar, so this will be a treat. Please do enjoy.