25 Aug Cofunds Criticised by IFAs for Keeping Them ‘Out of the Loop’
A number of financial advisers have criticised Cofunds amidst claims that the group keeps IFAs out of the loop and takes control of client assets without securing the authority to do so from the advisers' authority, specifically whenever an investment house closes one of its funds.
Adviser Robin Keyte, director of Somerset-based Towers of Taunton, claims that Cofunds failed to inform him about Scottish Widows Pan-European SRI Equity fund closing due to a lack of capital.
He later discovered that the group had told one of his clients about the closure immediately in addition to telling him that his £18,000 worth of invested units would be reverted to cash, all while cutting out the IFA.
Mr Keyte became aware of the move when his client called him up to ask about it. When he complained he was simply directed to the Cofunds website.
He commented "I’m appalled nobody had the courtesy to tell us at once that the fund had closed. The first we heard of it was when our client rang up asking what was going on.
Fortunately the fund closure coincided with a review scheduled for July for that client.
"If our client had not been so alert, and the review had been scheduled for a later month, the money could have stayed in cash until then, leading to an unacceptable degree of out-of-market risk.
"We need Cofunds to inform us directly when funds are closed because putting news on a website is not an effective means of communication. It relies on the IFA to be glued to the website and that’s not practical."
He also criticised the RDR for urging IFAs towards such platforms and claimed that further clarity was needed to prevent such issues from arising.