A case of outlandish spinning from the FSA
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Working in financial journalism I’m used to some outlandish spinning from well paid press relations staff often eager to mask the true story.
But for the life of me I cannot remember anything as bad as the latest dodgy dossier of statistics contained in the FSA’s inaugural RDR newsletter to advisers.
In a section called “Myth Busters”, the FSA hits out at advisers for suggesting that FOS statistics show IFAs offer a better service than the banks.
It is fair enough to point out that the fact IFAs only generate 2 per cent of FOS claims should not, on its own, be seen as conclusive proof of IFA excellence. The vast majority of FOS claims relate to banking, credit and PPI sales, areas where IFAs rarely operate.
But to highlight complaint statistics around pensions as evidence that the gap between independent advisers and banks is less than IFAs think is a gross manipulation of the statistics.
The FSA newsletter points out that IFAs are responsible for 28 per cent of pension complaints and banks 10 per cent.
However, five minutes number crunching ABI statistics for total individual pension premiums paid for 2009, with the help of a friendly pensions expert and a couple of spreadsheets, show banks had a 5.6 per cent share of the £12.7bn while IFAs had a 75 per cent share.
Taking into account this example of business volumes, is it really a shock to see IFAs generating more claims than the banks? The fact banks generated so many complaints given their small share of the market surely only adds weight to IFA arguments.
Looking at the FOS annual review for 2009, it is also worth pointing out that advisers have a lower uphold rate than the banks, 39 per cent compared to 52 per cent, something the newsletter also fails to mention.
As healthy scrutiny and debate about the RDR continues within the industry this type of propaganda is an unhelpful distraction which only undermines the message the FSA is attempting to send.
Paul McMillan is editor of Money Marketing - follow him on twitter here
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Readers' comments (29)
Alan B | 9 Feb 2011 3:53 pm
No surprises in this commentary at all. The FSA is presently acting like a wounded beast and is generating as much as it can to defend itself and doesn't really care about the veracity of its evidence - shame they don't apply the standards of diligence expected of advisers to themselves.
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Anonymous | 9 Feb 2011 3:59 pm
My firm has 450 names on our client data base. If we chose to mass market a "dodgy product" the greatest number of clients we could mislead would be 450.
Barclays missold 12,000 Aviva products.
Many IFA firms are small and the advisers are the business owners. We know the majority of our clients very well and do not go in for product flogging. There is very little likliehood of small firms being able to financially disadvantge a large number of clients at any one time - unlike the banks.
Every time Peter Smith makes a comment he shows his total failure to understand how the small IFA operates.
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Bernard Croft | 9 Feb 2011 3:59 pm
No surprise there then. Fancy expecting the FSA to adhere to the same standards that they require of us!?
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Exasperated me | 9 Feb 2011 4:01 pm
Will the CPMA be any different? Will it have the same people producing the same statistics which display outright prejudice and predilections? No, don't answer that...
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Roddy McKenzie | 9 Feb 2011 4:01 pm
I have already commented really but thanks for publishing this...strange that IFA online couldn't.
Come on something has to be done about this surely!
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Anonymous | 9 Feb 2011 4:15 pm
How long is Government going to put up with this nonesense from people determined to maintain their personal power base with self justification and no concept of ever questioning whether they have got something wrong themselves, no matter what the cost to anyone else.
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Anonymous | 9 Feb 2011 4:17 pm
When are the FSA going to realise they are strangling the access people have to advise
No young person in their right mind should consider coming into Financial Services and therefore the industry is dying on its feet.The average age of an advisor must now be over 50
Continuing to fight their corner on RDR will mean their will be nobody available to give advise apart from the Dodgy banks who have already been caught with their pants down
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Anonymous | 9 Feb 2011 4:24 pm
Surely this highlights that either the FSA are
a)biased toward banks as many IFA's suspect or b) they do not understand the statistics they quote.
Either way this is embarassing for the FSA and highlights the needs for a regulator that understands the financial markets if we are to avoid another crisis.
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Rod | 9 Feb 2011 4:34 pm
*ankers looking after Bankers, how low do they eventually get? low enough to walk under a snakes belly!
The FSA FOS and the FSCS are a disgrace.
Tthe Directors should join the communist party and go and live in North Korea lets see how long they would survive.
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Blair Cann | 9 Feb 2011 4:37 pm
Thank you Paul.
My first thought when I saw the FSA comments re pension compalints was "what are the respective shares of this particular market?" The FSA figure is meaningless without this information. The point is surely that the FSA should have known this further statistic was required before drawing any conclusion-it is not rocket science.
On the face of it the FSA figures and conclusions are either superficial and the FSA should recognise this and issue a further statement, this time of apology; or they knew it and decided to put the figures forward anyway in which case there appears to be a breach of integrity involved.
I find it diffilcult (perhaps I am being naive) to believe the latter-the FSA need to clarify their position.
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