Ignoring any blatant abuse, the main dangers come from two areas:
n Where so little non-advised business takes place there are no written procedures for processing the business and staff get the process wrong. In these circumstances a business owner will need to decide whether to invest in developing a process or point customers elsewhere.
n When dealing with existing clients who want to invest or insure and put the business through your agency.
The second example is a common one. It is really important that the client understands that no advice has been given and you need to ensure your people are vigilant on this point. Increasingly, firms offering non-advised services record all telephone conversations for supervision issues, this makes more sense than checking a file as the risks are generally in giving advice on the call rather than in the letter issued.
Phil Young is managing director of Threesixty
A: Before you recommend a non-advised route, ask yourself these questions:
Is the client’s level of understanding or attitude to risk appropriate for a non-advised sale?
*Is the product appropriate for non-advised sales (for example, complex or high risk products are more likely to require advice)
*Can the customer afford to pay for advice?
*Is their investment so small that taking a charge of, say, £1,000 would leave them worse off?
You must consider whether a client would be comfortable with information only and no recommendations. If any of these are likely to apply to the customer, a non-advised route may not be suitable.
As far as protection goes, a customer who invests without taking advice has a measure of protection through the Financial Services Compensation Scheme. However, you should remind the customer that they will not have any other protection if he makes his own investment decisions and it is ultimately unsuitable for him.
Andy Beswick is intermediary director of Aviva
