“You’ve got so-called ‘advisers’ moving over to Spain with their families because they want new lives, who’ve never given financial advice before in the UK and because the regulations aren’t as clear and strict as they should be, they set up here.
“I’ve been in Spain for 11 years and for me it’s been like working in the ‘wild west’ in all honesty,” Speed told an audience of European advisers at the International Adviser Future Advisory Forum Europe roundtable in London on Wednesday.
Unlike most of Europe, in the UK, under RDR financial advisers must be qualified to a Level 4 (Diploma) to practise.
Earlier this month, a group of British expats launched a lawsuit against NM Rothschild over an ill-fated property investment, after the now-defunct Spanish advisory firm Henry Woods persuaded them to take out mortgage worth up to 75% of the value of their Spanish homes.
“You’ve got so-called ‘advisers’ moving over to Spain with their families because they want new lives, who’ve never given financial advice before in the UK."
Poor advice
She added that due to more lax standards in Europe compared to the UK, Speed Financial Solutions, which has been operating in Malaga since 2010, has come across a number of clients who have fallen foul of these poorly qualified ‘advisers’.
“We’ve come across cases where people are looking to transfer over to us but the previous advice which they’ve received has been very very poor.
“The client’s attitude to risk has been washed over, there’s not even been a conversation about it. They don’t really understand the product that they’ve got and they don’t understand what charging structure they’re on,” said Speed.
Improving standards
However, Michael Lodhi, chairman of Luxembourg-based Spectrum IFA, said despite the negative perception of advisers based in Europe, there has been an improvement in the standards of qualified advisers in recent years.
“You do come across some advisory firms and advice which is inappropriate. In the main, the standards of advisers in western Europe have been improving,” he told IA.
Speed agreed, revealing “there’s less firms now that aren’t qualified but we had many years where we had that as an example”.
Pan-European qualification
The Federation of European Independent Financial Advisers (Feifa) said it has spent the past 12 months unsuccessfully lobbying the European Commission to consider introducing a pan-European qualification for financial advisers.
“We’ve been working on a pan-European financial adviser qualification but it will probably be impossible to implement before 2020,” said Feifa’s chief executive, Paul Stanfield.
At the moment, professional body the European Financial Planning Association (EFPA) certifies financial planners and advisers working across Europe.
However, Stanfield explained that in 2020 the EU plans to introduce the European Qualifications Framework (EQF), a comparison table which allows the 28 member states to find the equivalent national qualifications for every industry across each country.
