27th November 2012

What do I do when lightning strikes me?

The phrase “pigs can fly” means something that you say which means you think there is no chance at all of something happening.

So it was with some sense of irony that I read; “FSA upholds complaint following its customer contact centre giving the wrong advice to an adviser, admitting its service fell below its “usual standards”.

I think many would find the above statement very hard to believe but it is clearly true, a rare admission and refreshingly welcomed.

Yet it is very worrying at the same time. Now, the FSA state that if advisers are not appropriately qualified or waivered they are not allowed to advise under supervision post 31^st December.”

The FSA’s customer contact centre had told David Chubb, of Sussex-based David Chubb Financial Planning that it was in order to use a locum until he achieves the required level of qualifications for post RDR trading.

But they did not confirm it in writing.

David Chubb contacted us and outlined the situation as follows;

“I had wanted to know if my locum could deal with the advice work, and I would deal with the para-planner aspects during my extended study period. My wife and I have suffered ill health - she spent time in hospital at the beginning of the year after a suspected heart attack, and I have had two adversely complimentary medical conditions for 2/3 years, which have caused me severe sleep deprivation (sleep apnoea – I cannot get on with the CPAP machine to ease this), coupled with an enlarged prostate.  An operation in March 2012 helped significantly.

I began studying in April for the level 6 CISI, PCIAM exam: I thought, if I have to do an arguably controversial exam to requalify at my age and level of experience, I wanted to take one that best fitted by business needs and interests  – it wasn’t the easiest route, and few IFAs have taken it I am told. Incidentaly, my firm has been fee based for most of its existence (20 plus years).

Admittedly it was a particularly tough exam to expect to pass in a short space of time (especially as it is generally aimed at stockbrokers and investment bankers), with a final chance to qualify for the RDR deadline being the September examination. I have not been a slouch in the circumstances, and anyway the issue here was about the FSA’s incompetence. I am aware that I can apply for an extension on health grounds and am in the process of doing so – I had wanted to cover all potential options to keep my business going until I pass the PCIAM exam in case my application for a waiver was rejected. It most certainly wasn’t an attempt by me to beat the system.

Kind regards

David

David R Chubb MIFP Cert PFS  -  Financial Planner, Investment and Wealth Manager

And as we work in such a highly regulated industry the golden rule in any such circumstances is get confirmation in writing.

We learn that the FSA wrote to Mr. Chubb, confirming he had been given the wrong advice (I would assume they found a telephone record and possibly some system notes to support the complaint) apologized and moved on.

But this raises some important questions:

• Why is a locum not acceptable
• Would this decision be the same if Mr. Chubb relied on a locum while on study leave?
• If a locum is not acceptable, and the FSA admit an error, should they not cover any costs incurred as a result of their incorrect advice
• How is the firms PI cover affected
• What is the trail position if his firm has no CF30 adviser registered?
• How many other advisers are in this position?

I would be interested in some feedback on this subject and also if there are any consultancy firms who can assist advisers finding themselves without the qualifications on January 1^st

Panacea Comment