When you engage with a Financial Planning firm, one of the first things they will ask you to do is sign a Letter of Authority (LOA). However, what are you signing?
Over the past few weeks, we’ve received questions about Letters of Authority (LOAs). In this blog post, we aim to explain what these forms are, clarifying the difference between the two letters that we use and why we commonly use one over the other.
Over the years you may have collected a range of different policies, so to enable us to advise you on those, and assess if they are still right for you, we need your authority to speak to your existing providers on your behalf.
A letter of authority does just that. It is a legal document that is signed by the policyholder, granting the financial planning firm the authority to request information about their policies.
There are two different types of LOAs that we use; information only and change of agency.
An information-only letter of authority means just that; we can request information, but we can’t make any changes. Sometimes providers put a time limit on these types of letter of authority, typically 12 months, so if we still require information after this time, we will need to get you to sign another LOA.
It also means that you are responsible for implementing any changes we agree upon, which means more admin for you to do.
It is important to note that an information-only LOA does not remove the previous adviser associated with the plan. Your former adviser will remain on the policy until there is a change of agency. They will not be notified of the information-only request either.
Change of agency
On the other hand, a change of agency letter of authority means the new firm assumes the role of your financial adviser and will, therefore, be responsible for all ongoing advice. This LOA grants full servicing rights, meaning that information can be requested, and changes to the policy can be instructed. However, only with your permission to make each change, each time.
Ongoing servicing rights make the process of providing advice efficient and smooth all-around. In practice, this means that when you agree to any alterations, we do the administration for you.
A change of agency removes any previous advisers that were associated with the plan. They would receive notification of this.
What does the term “ongoing servicing rights” mean?
Ongoing servicing rights allows a firm to do things such as switching investment funds, arranging withdrawals or topping accounts up. Every single transaction or change that takes place on your accounts would only ever happen as a result of advice.
We confirm what we are suggesting doing and why. And before any changes take place we’d need your go-ahead. Sometimes the provider needs extra paperwork too.
It’s important to note you can revoke the authority anytime directly with the provider. You’re not tied in.
A bit more about us
We are directly authorised and regulated by the FCA, the financial regulatory body in the UK. You can see our listing on the register here.
For those who would like to know more information about each of our advisers, Rebecca, Krupesh and Tina, we have put together separate adviser packs detailing their background, including their professional body membership and statement of professional standing. These packs can be found on the website profiles for our advisers, which can be accessed via our team page here.