Dealing with providers – everyone’s least favourite part of financial services at the best of times, right? We joke about it with our new trainees; how we hope they enjoy the sound of Greensleeves, or being told that 2 + 2 = 7. It’s just a fact of finance life. But… it seems to be getting far worse recently. Here’s a couple of tweets, just in the last 24 hours:

I also spoke to an adviser recently who has compiled a dossier of the challenges she has had with certain providers recently – it is pretty damning. Her point is that these companies are making it physically impossible for her to work with them. Which shifts the dynamic on the burden of recommendation; rather than the default being to stay where they are and only recommend a change if there is an objectively suitable alternative, it costs her company and team money to service the client with the existing poor provider. And so it’s difficult to justify recommending no change to the provider; if the client wants adviser support, it is going to be disproportionately more expensive to provide by maintaining where they are, and how exactly do you factor that into a charge comparison?

Another firm got in touch with us recently to ask if we have any special, magical numbers, like a hotline, that helps us get better service from providers (we wish!) as they were tearing their hair out with one provider () quoting 93 days…! She was not alone in being quoted these timescales…

Anthony makes a very valid point around TCF; how can this level of service really enable us to support a client in the way we aspire to, and what on earth does it mean in the context of the new Consumer Duty proposals?

I have a theory on it. Old legacy policies are, by their nature, old in their set up and physical structure. I recall many a time ringing about an ancient Phoenix Life policy, only to be told that the file on it was physical, and in the office basement, and someone would need to dig it out and call me back in a few days. There was, initially, a bit of a shift towards digitising some of this old stuff, as providers tried to improve their service levels, and give advisers less reason to recommend moving the assets away from them.

However, my theory is that they realised that this was a losing battle. That they were never going to get everything online and in a useable format faster than the emergence of platforms and the ease with which advisers could move clients to something far more flexible, accessible, and usually, lower cost. So, they shifted their focus. They gave up even trying to do anything on the old stuff, knowing it was going to get moved… and instead they focused on providing a new ‘home’ for it to be moved to. They focused on how they have a better contract or platform (their own in our partnership) and dedicated resource to the new home for assets, rather than maintaining the existing stuff.

I can kinda see the rationale from a purely business perspective – but – that’s not the point. For most of these policies they took huge upfront fees, and not insubstantial ongoing charges (some of them are still eye watering). They have had, and continue to have, money from these plans in order to maintain them. It’s not right to take those charges, and then just get bored and leave them to flounder while they go focus on the new shiny thing.

The question, as always, is what can be done about it? We can name and shame – plenty of people have – but the infrastructure simply isn’t there in those companies, and they’re highly unlikely to put them in. Maybe Anthony is right and the only option to make an impact is for the FCA to wade in – but they’re far too busy focusing on every move advisers make. We see good firms battling hard to get their FCA applications through, and yet it has emerged they have not rejected a single application for a new fund in the last 5 years. There is a definite imbalance and I don’t think it would take much for the FCA to warn providers on their service levels for the fees they are receiving (in the exact same way advisers have to be clear on their service levels, for the fees they are receiving) for them to sit up and pay attention. Perhaps it’s time to do something about it…

Cathi Harrison

Not yet subscribed to Eclipse? Join the club here.