Treating Clients Fairly
SFIA is regulated and authorised by the Financial Conduct Authority (FCA). The FCA act to ensure that all financial advisory firms have their clients at the heart of how they conduct business, recommending the most appropriate solutions and services and putting client protection above profits or remuneration.
To make sure clients are protected and treated fairly, the FCA monitor which firms and individuals are able to enter the financial markets, making sure that they meet their standards before they authorise them.
They supervise how they work and stop those that are not meeting their standards from carrying out the activities that they regulate.
Where they find that firms are not following their rules, they intervene. This can mean stepping in to impose penalties, to stop them from trading or to secure redress, and ensure that clients receive the information they need in the right way so they can make the best decisions for themselves.
The FCA also ensures that financial markets provide appropriate levels of access and information to satisfy the needs of clients and firms that use them. As part of this, SFIA has to demonstrate that we have a resilient infrastructure with strong risk management, individual accountability and a responsible culture.
The FCA also requires that we must be able to demonstrate consistently that fair treatment of clients is at the heart of our business, and, above all, clients can expect financial services and solutions that meet their needs from us as a firm they trust.
SFIA pay due regard to the interests of our clients and treat them fairly by following six client outcomes as part of this process:
Outcome 1: Clients can be confident that we have fair treatment of our clients at the centre of our corporate culture.
Outcome 2: Products and services we offer are designed to meet the needs of our clients and are recommended accordingly.
Outcome 3: Clients are provided with clear information and are kept appropriately informed before, during and after the point of recommended advice.
Outcome 4: Where clients receive advice, the advice is suitable and takes account of their circumstances.
Outcome 5: Clients are provided with products that perform in accordance with the advice we have given, and the associated service is of an acceptable standard discussed. Please reword this sentence. It is difficult to understand the point you are making.
Outcome 6: Clients do not face unreasonable post-advice barriers imposed by us to change a product, switch provider, submit a claim or make a complaint.
How your money is protected and how much compensation you could claim
The FCA has provided the following guidance about how your money is protected and how much compensation you could claim. There are seven steps to claiming compensation.
Step 1: Contact the firm directly
Contact the firm to see if it can pay money it owes. If an authorised firm will not pay you money it owes, the Financial Ombudsman Service (FOS) may be able to help.
Step 2: Check if the firm is still trading
You may be able to find out if a firm is still trading by calling or writing to it, or checking its website. You could also get this information from Companies House.
If a firm has stopped trading, you should still try to contact it as soon as possible to set out your claim, as the Financial Services Compensation Scheme (FSCS) will not pay compensation when a firm has enough assets or means to pay claims made against it.
Step 3: Contact the Financial Services Compensation Scheme
The FSCS can cover eligible individuals (and some businesses) that are, or were, clients of an authorised financial services firm that has been declared ‘in default’.
If it considers a firm used by SFIA to be ‘in default’ – which means it is unable or likely to be unable to pay claims against it – the FSCS will try to contact all clients of the firm to provide a compensation application form.
However, if you do not receive an application form, you should contact the FSCS to make a claim for compensation.
Step 4: Make a claim yourself
There are many companies that offer to complain or claim compensation on your behalf, usually known as claim handlers, claims firms or claims management companies (CMCs). However, making a claim for compensation to the FSCS is a free, simple process that you can do yourself.
You can get free help from the FSCS if you need it.
Step 5: Know your limits
There are limits to the amount of compensation the FSCS can pay depending on what type of product you are claiming for.
These limits apply to each person, per authorised firm and product category.
Compensation is only paid to cover financial loss, so for investment claims the compensation paid will try to return you to the financial position you would have been if you had not invested.
| Deposits | £75,000 per depositor. | Depositors with some types of temporary high balances will have FSCS protection up to £1m for up to six months. This includes deposits in a bank, building society or credit union. |
| Investments | £50,000 | This applies to investments placed in firms declared in default from 1 January 2010. |
| Home finance | £50,000 | This includes advising on and arranging mortgages, and applies to home finance firms declared in default from 1 January 2010. |
| Insurance | 90% of the claim with no upper limit. | This limit is for insurance business, and general insurance advice and arranging. Compulsory insurance is protected in full. |
If you have more money with a firm than the FSCS limit covers, you may receive a further payment (or payments) to pay your share of any money the firm is found to have. However, this will not necessarily cover all of your loss and will depend on how much money was left in the firm when it failed and how that money is allocated.
Step 6: See why a firm is not ‘in default’
If you think a firm authorised by us is ‘in default’ but the FSCS has not declared that it is, contact the FSCS to find out whether it is investigating the firm.
Step 7: Find out what you owe
The FSCS will pay compensation regardless of any money you owe to a firm declared in default. An exception to this is if your savings or current account is combined with your mortgage account and operates as a single overdraft. The depositor will still be responsible for the debt, such as a loan, mortgage or credit card debt.
Remuneration
During the initial free, no obligation meeting, SFIA will access your requirements, and you will be given clear information about the type of advice and level of service to be provided by the adviser and how much it will cost.
You will be given details on how the firm is regulated by the FCA, the range of products we are authorised to advise on and any information we are required to give you. The details outline the type of products the firm offers advice on, for example, investments and savings, pensions, long-term care planning, and protection.
There will always be a cost for your adviser’s service, as like any other business arrangement, you are benefiting from their expertise. Clients pay for advice in three main ways:
Fees
Since 31 December 2012, it has been a regulatory requirement that the cost of all investment and pension advice be based on a fee rather than commission. Please telephone us on 0845 458 3690 if you would like a copy of our list of fees
Commission
We will always tell you about any commission we earn, and the cost of this commission paid out by the provider will normally be factored into the price of your product. These commissions vary with different products and providers but will be documented on the key facts illustration (KFI) you receive from the adviser
Fees & Commission
By paying a combination of fees and commission, the adviser will rebate back into the financial products or hand to you some or all of the commission, or offset it against the fee
Whether we take our remuneration by way of commission or fees will be a matter of discussion and agreement, and no charges for fees will be made without prior notification in writing.
