Always get advice in writing

In response to confirmation from the Financial Services Authority (FSA) that IFA firms are not required to record phone calls with clients, BBC presenter Paul Lewis wondered whether this exposed investors to the risk of misselling.

Whilst this risk exists in respect of the tiny minority of advisers who would make unreasonable verbal promises to their clients, we always recommend that investors only accept what they get in writing.

Here at Informed Choice, we always provide our advice in writing, in the form of a written report. This is sent to our clients ahead of a meeting to discuss the recommendations, so the client has the opportunity to read and understand what is being recommended.

This is unfortunately not standard practice at every IFA firm, with many firms still confirming their recommendations in writing to clients after the event.

We believe that documenting recommendations before any forms to apply for an investment or other financial product are signed is essential in order to avoid the chances of confusion.

@martinbamford @incisivepal >>> So IFAs can make verbal promises or mis-sell products with no chance for customer to challenge?

— Paul Lewis (@paullewismoney) April 18, 2012

Whilst taped recordings of conversations between financial advisers and clients are not a regulatory requirement, the best evidence (should evidence be needed) of what was said comes in the form of a written suitability report.

For this reason, it is essential that all investors request confirmation of what is being recommended in writing, preferably before any forms are signed.

If there are any discrepancies between what has been said and what has been written down, it is important to get written confirmation based on your understanding of the recommendations.

What is written down is what happened in the eyes of the regulator and will also be the main evidence considered by the Ombudsman should you ever have the cause to complain in the future about the advice you have been given.

An adviser who makes verbal promises and is then reluctant to commit these to a written report is an adviser you should not trust with your financial wellbeing.

We hope that the FSA does not extend its telephone taping rules to include financial advice, as this will introduce another business expense which will inevitably be passed on to investors in the form of higher fees for advice.

Photo credit: Flickr/J Paxon Reyes