The purpose of this document is to inform you of our terms of business. It contains information which our regulator the Financial Conduct Authority requires financial advisers to provide to their clients. It explains how we operate, the range of services we offer and how we charge for our services. It also provides certain other information which we, as professional financial advisers, are required to give yo u. Since this document sets out the basis on which we will act for you and which you accept by instructing us in any matter, it should be retained for future reference.
On individual matters we may also send you a separate letter of engagement containing information relevant to that matter.
Independent financial advice
Not all advisers are independent. Some are confined to advising on the products of one or more providers of financial products and investments. We are independent and provide financial planning advice which embraces tax and other issues as appropriate. When recommending products we consider impartially the products of all relevant companies and recommend whatever course of action we consider to be in our clients' best interests.
Classification of clients
For the purposes of compliance with the requirements of the Financial Conduct Authority, we treat our professional clients as if they were retail clients. This means that we undertake a greater obligation of disclosure and communicat ion of risk than would otherwise be necessary.
We will seek clients' consent to our recording their relevant personal information on our firm's computer system. We will supply to clients, at their request, a copy of the data relating to themselves and will provide them with a description of the data and the purposes for which it is processed and with details of the source of the data and any potential recipients of the data. We do not sell your information to any third party. Unless advised to the contrary in writing by clients we will assume that we can share their financial data with their partner/spouse.
Conflict of interest
In the event of any conflict arising between our own interests and those of any client, we will disclose all the relevant facts to the client in question and if appropriate decline to act for the client.
What will you have to pay us for our services?
You will pay for our services on the basis of an adviser charge, fee or commission. We will discuss payment options with you and answer any questions you have. We will not charge you until we have agreed with you in writing how we are to be paid.
The cost of our services
Adviser Charges are usually taken out of the products we recommend for you. This can avoid having to pay VAT in certain circumstances.
|Service||Initial Adviser Charge||Ongoing Adviser Charge for annual reviews|
|Portfolio Management and Complex Financial Planning||Between 0%-3% of the advised investments, depending on portfolio size and complexity.||Between 0.5%-1% per annum.|
|Ad Hoc Advice||Fees will be agreed in writing with you before commencement of any work.||N/A|
Please refer to Adviser Charge examples set out below.
This service is designed for clients who do not wish to make their own investment decisions. It provides advice on investing in a portfolio where the investments are managed day-to-day by professional fund managers and includes half-yearly statements and regular Financial Planning reviews to cover:
- The continuing suitability of the managed portfolio for your objectives
- Your appetite for investment risk and the risk profile of the portfolio
- Use of your annual tax allowances and exemptions
- Half-yearly statements and commentary
Complex Financial Planning
This service includes advice on various Financial Planning matters, including retirement benefits, inheritance tax planning, pension switches and cash flow forecasting, all of which may demand a more specialised and time-intensive approach and complex research.
Adviser Charge Examples
You invest £100,000 into unit trusts and require the review service .
Our initial charge is 2% of the £100,000 invested, i.e. £2,000. The annual charge is 1% of the value of the fund, i.e. £1,000.
You require advice on the suitability of transferring a personal pension of £400,000
The initial charge is 1.5% on the £400,000 fund value, i.e. £6,000.
You have an investment portfolio of £750,000 and require the review service The annual charge is 0.75% of the £750,000, i.e. £5,625.
Please note that, as charges are percentage based, they will increase in monetary terms as the value of your portfolio grows.
Ad Hoc advice
A fixed fee will be agreed between the Adviser and client before any work is carried out. It will depend on the complexity of the case, the time required and whether we will have to call upon further expertise. Fees will be agreed with you in writing before any work is carried out. Where fees have been agreed these will become payable upon completion of our work, whether you subsequently act upon our recommendations or not. You may be asked for an initial down payment before work is started. You will not be charged any more than the amount agreed, unless we subsequently agree with you that the cost of our work is going to be higher than originally estimated.
Where we recommend products such as life policies we may receive a commission from the provider. The amount of commission will be confirmed in writing to you.
Ongoing charge for reviews
For our investment clients we provide half-yearly statements and market commentary. We also provide a full Financial Planning Review service. The cost of these services is between 0.5% and 1% of the amount advised on and will be detailed to you in writing before you become a client. The annual charge commences at the start of year one and is deducted monthly or quarterly from the cash in your portfolio.
Adviser Charge - your payment options
We can often arrange payment of our adviser charge from your investment amount through the provider of the recommended investment products. Alternatively, a separate cheque may be payable at the time the recommendations are accepted.
Value Added Tax (VAT)
No VAT is currently payable in respect of work which gives rise to commission payments. Fees for other advice may be subject to VAT at the appropriate rate (currently 20%).
Investment certificates and policy documents
We arrange for all investments (certificated and uncertificated) to be registered in the names of our clients or such nominees as they may instruct. Any investment certificates or other evidence of title to investments which we may receive will be forwarded to clients.
The Money Laundering Regulations
We are required for the purposes of the anti-money laundering regulations to verify the identity of our clients, to obtain information as to the purpose and nature of the business which we conduct on their behalf, and to ensure that the information we hold is kept up-to-date. For this purpose we need to obtain information about our clients and one of the ways in which we might do this is to access electronically information held in the public domain.
We do not handle client money. We never accept a cheque made out to us unless it is a cheque in settlement of our fees or disbursements for which we have sent you an invoice.
In order to preserve the confidentiality of client information and to protect clients against the risk of identity theft, we may ask clients to advise us if they wish to receive personal information by telephone or in other ways which will prevent us from ensuring that it is the client who is requesting the information. If clients do wish to receive information in this way, we may ask for special identifying information, such as your mother's maiden name.
From time to time the firm may be subjected to confidential audits conducted by our regulator, the Financial Conduct Authority. These audits a re intended to ensure that the firm is complying with the current regulations and acting in the best interests of its clients and they may involve scrutiny of client files. Files and information relating to your matters may be included in such inspections and reviews.
Working with other professional firms
When we are asked to advise the clients of professional firms such as accountants or solicitors we liaise with those firms so as to ensure that our advice complements theirs. In recognition of their involvement, we may pay such firms a proportion of our remuneration.
In accordance with the requirements of the Financial Conduct Authority we ask our clients to confirm that we may retain sums of trail or renewal commission which are so small, relative to the overall amount of our fees payable by the client to whom they relate, that it would be impracticable for us to account to our client as described above.
Questions and Complaints
If you feel there is a problem with our work or our charges, you are entitled to complain and, should this be the case, in the first instance you should raise the matter with the Director responsible for the matter. This would also apply if you simply have a question regarding the service you are receiving. If you are still not satisfied, please write to our client care director, Philip Brown at Scholes & Brown, Rotterdam House, 116 Quayside, Newcastle upon Tyne, NE1 3DY or telephone him on 0191 206 4170. He will let you have a response as soon as possible, usually within 14 days. No charge will be made for following this procedure.
This is all part of a process we operate to deal with such eventualities and you may request a copy of the relevant written procedures should you wish to see them. If we are not able to satisfy you completely with our response, you have the right to make a complaint about the matter by contacting the Financial Ombudsman Service on 0800 0234 567 or by writing to them at The Financial Ombudsman Service, South Quay Plaza, 183 Mar sh W all, London, E14 9SR.
The roles and procedures of the Financial Ombudsman Service are explained at www.financial-ombudsman.org.uk
We are covered by the Financial Services Compensation Scheme. You may be entitled to compensation from the scheme if we cannot meet our obligations. Most types of investment business are covered for 100% of the first £50,000 and bank and building society cash deposits are covered for 100% of the first £75,000.
No responsibility can be accepted by this firm for (i) any action taken without its professional advice in reliance on the contents of any Report submitted by the firm or (ii) any advice given by referring solicitors or accountants, whether in a joint meeting with advisers from the firm or otherwise.
The relationship between Scholes & Brown and our clients may be terminated at any time by either party giving written notice. Termination will not affect instructions which have been auctioned or liabilities which have been incurred. In the case of our Financial Planning and Portfolio Management Services, an annual review is an integral part of both these services and cancellation of the annual review service will result in the termination of our relationship in full.