24th October 2015
Consumer group Which? has criticised IFAs for not being up-front with potential customers by giving no idea of their fees on their websites.
Which? analysed the websites of 500 UK IFA firms and found more than two-thirds (349 firms) didn’t publish their fees and charges online, giving customers no advance indication of what they could be charged.
Which? is calling on all IFAs to disclose charging structures on their sites so customers know up-front what services are likely to cost and can shop around. IFAs are required to give prices to clients before an agreement is reached, but this usually happens at the introductory meeting. Which? says believe customers should have an indication of what they will pay before committing to meet advisers face-to-face, where it says “they could face a full sales pitch”.
Which? notes that the financial watchdog, the Financial Conduct Authority (FCA) currently states that it is ‘best practice’ for IFAs to display fees online, but the consumer group wants this to be mandatory.
Which? also contends that
Nearly a quarter of sites (115) we looked at purported to show their fees, but most of these (76%) don’t give enough detail to give a real indication of what you would pay. Many sites use these pages as an advert for face-to-face meetings.
Just 2% of the sites looked at publish genuinely useful information for clients including a clear breakdown of charges.
Just 33 sites allowed us to download a ‘Key Facts document’ and of these 25 didn’t have a suitably detailed fees page or had no fees pages at all.
When Which? contacted IFAs nearly a third (31%) provided a rough idea of fees when contacted by potential customers, but one in 10 (12%) refused to divulge costs even during an initial telephone enquiry.
Which? executive director, Richard Lloyd says: “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.”