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HomeEconomyTONY HETHERINGTON: Did Tier One Capital's advice to switch funds break rules?

TONY HETHERINGTON: Did Tier One Capital’s advice to switch funds break rules?


Tony Hetherington is the star investigator for the Financial Mail on Sunday, fighting readers’ corners, revealing the truth behind closed doors and winning victories for those who have run out of money. He find out how to contact him below.

Mrs HB writes: In 2021, our financial advisor Tier One Capital Wealth Management’s annual review informed us that its advisory fees would increase from 0.50 percent to 0.60 percent.

To offset this increase, Tier One recommended switching from the Prudential Growth & Cautious funds to Vanguard Lifestyle Equity, as Vanguard’s fees were lower.

This has reduced the stability and predictability of our pension fund from which we draw income, and we want Tier One to put things back to the same level they would have been had they not recommended a change.

Tony Hetherington replies: all meInvestments linked to the stock market carry risks. There are no guarantees. And while the two funds you mention are not identical, they are not so different that a recommendation to make a switch is completely inappropriate.

Fee hike: Jess Swindells of Newcastle-based adviser Tier One Capital Wealth Management

I contacted Tier One, based in Newcastle, and CEO Jess Swindells gave me a statement from the company that said: “At the time the advice was given to the client, fund diversification offered the highest recommendation.” appropriate and profitable, in line with the client’s goals, objectives and risk attitude.’

That seems fine to me. But what worries me is that the motivation for the change appears to have been the increase in Tier One fees themselves.

The investment switch was presented to them as a way to avoid this increase, and not because one fund was better than the other.

The Tier One review told him that his rates were going to increase, then added: “This is not a decision we have made lightly and as maintaining and developing a high-quality advisory service is our primary consideration, we have researched the market on your behalf, to reduce, where possible, the costs of managing products and funds associated with your portfolio, with a view to offset some of the above fee increases.’

In short, make this change because our rates are increasing and you can reduce the impact by investing in Vanguard and its lower fees.

However, this seems to go completely against the rules set by the Financial Conduct Authority (FCA), which regulates Tier One.

The FCA’s rule book says that an advisory firm should not suggest that an ordinary client switch from one investment product to another “if it knows, or should know, that the charges for the product… are presented in a way that compensates or may appear to compensate for potential consulting expenses.”

This seems to mean that investment recommendations should be made simply on their own merits, so I asked Jess Swindells if she would agree that her company’s review was in breach of the rules. She declined to comment.

You have asked the Financial Ombudsman Service to look into this and Tier One has told me it will cooperate.

It seems to me that the wording of the Tier One review is completely against FCA rules and I don’t see any other interpretation, so it’s a shame Jess Swindells can’t offer any.

Why is our £16k Isa stuck in limbo?

Mrs JH writes: My husband and I each transferred an Isa to Nationwide, both with over £16,000.

At the national level I opened my ISA but it has been three months since my husband’s has been opened. We found out that Nationwide had returned their money to Isa’s previous supplier, Skipton Building Society.

No one from either company contacted us until we filed a complaint with Nationwide, whose staff said they were trying to get the money back from Skipton.

In limbo: Nationwide opened Ms JH's ISA, but three months after her husband's it hasn't opened

In limbo: Nationwide opened Ms JH’s ISA, but three months after her husband’s it hasn’t opened

Tony Hetherington replies: I asked both societies to investigate. Skipton was quick and she told me that she had sent her husband’s £16,099 to Nationwide, but it was returned the next day with no explanation. Two days later, Skipton transferred him back to Nationwide.

Nationwide confirmed it received the funds after both transfers, but told me Skipton hadn’t provided her husband’s details, so the money ended up in a Nationwide suspense account. Nationwide added: “While this was not a mistake by Nationwide, we could have been more proactive in locating the funds.”

Her husband’s Isa has been opened, retroactive to avoid loss of interest, and Nationwide has offered £350 in apology.

Late holiday payment of £500

Mrs LT writes: After my husband fell ill while on vacation in May, I filed a claim with Coverwise insurer, whose policies are underwritten by Axa.

They asked me for details, which I gave them four times, and a few weeks ago I managed to speak to Axa and they told me that around £500 would be in my bank account in the next few days.

Nothing has arrived.

Delay: Ms LT filed a claim with Coverwise insurer, whose policies are underwritten by Axa

Delay: Ms LT filed a claim with Coverwise insurer, whose policies are underwritten by Axa

Tony Hetherington replies: I contacted Axa Partners, who supported their policy, and staff agreed that after receiving the information they needed, there was a delay in dealing with it.

]The insurer apologized and told me: “We have reviewed Mrs. T’s claim and acknowledge on this occasion that the service we provided did not meet the usual high standards that we set at Axa Partners.”

Your claim has already been paid, plus an additional £125 as an apology.

If you believe you are the victim of financial irregularity, please write to Tony Hetherington at Financial Mail, 9 Derry Street, London W8 5HY or email tony.hetherington@mailonsunday.co.uk. Due to the high volume of inquiries, it is not possible to give personal answers. Only send copies of the original documents, which we regret cannot be returned.

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Merry C. Vega is a highly respected and accomplished news author. She began her career as a journalist, covering local news for a small-town newspaper. She quickly gained a reputation for her thorough reporting and ability to uncover the truth.

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