FSA attacks banks over aggressive selling tactics
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The FSA has attacked banks and large financial services firms for basing their business models around aggressive selling tactics.
Speaking at a conference held by Which? on financial services reform in London this morning, FSA interim managing director of the conduct business unit Margaret Cole rejected claims made by British Bankers’ Association executive director of retail Eric Leenders that many consumers continued to trust high street banks.
Cole said: “I am not in the business of banker bashing, but I do have to say if you look at the evidence unfortunately in relation to payment protection insurance, which has been the most recent saga, it was really the big retail banks who were the major players.”
She said misselling issues have emerged over the last 20 years which have cost consumers £15bn, not including the £9bn cost of PPI misselling.
Cole added although the Financial Conduct Authority will have new powers to intervene where it sees consumer detriment, such as product bans, it is also up to banks to develop a “cultural responsibility” so that the regulator needs to intervene less often in the first place.
She said: “It is particularly striking to me that when we have been doing more business model analysis we see how much of the business models of major institutions are being driven by aggressive product sales. If that remains the business model there is always going to be a high risk of misselling of products.
“We have to be prepared in the new culture of the FCA to be more interventionist to head off those issues before they really get going.”
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Readers' comments (30)
Anonymous | 27 Jun 2011 1:57 pm
Well well the FSA have finally realised that banks have been ripping consumers off. Regrettably the FSA did not say that as from 01/01/2013 the only place for those who cannot afford to pay a fee will be you've guessed it the banks. Well done FSA
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Anonymous | 27 Jun 2011 2:03 pm
Have these people simply been asleep for the last couple of decades?
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George Williamson | 27 Jun 2011 2:06 pm
Ony 10 years late with that conclusion - if I was that slow at my job, I would be in clear breach of TCF and subject to FSA censure!
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Anonymous | 27 Jun 2011 2:14 pm
She said "misselling issues have emerged over the last 20 years which have cost consumers £15bn, not including the £9bn cost of PPI misselling"
She could have added "Although we at the fsa have always known about this, we turned a blind eye to our "buddies at the banks" wrongdoing and concentrated instead on those annoying little IFAs who do not have the money nor the political clout to answer back. That way, we look so busy, we can ask for millions to be added to our budget each year in order that we can attract the best people like myself who can rapidly pinpoint where the trouble stems from.
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Thomas Kelly | 27 Jun 2011 2:15 pm
Is that a horse I can see running round the field outside the stable....best close the stable door then...
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Anonymous | 27 Jun 2011 2:17 pm
I still find it strange that the FSA report into the Barclays/Aviva debacle made no reference to the amount or rate of commission generated by "selling" the Aviva product rather than an alternative.
Regardless of whether it is a bank, large IFA/advisory firm or small firm, if salesman/advisers are rewarded by hitting sales targets there will be agressive selling. Advisers can fill their boots by flogging inappropriate products and then move on to another firm or industry.
On a separate issue i have today picked up a new client who was previously been advised by Barclays IFA division. She tells me she has "been left out on a limb" with no assistance from Barclays. Good for me, but an indication of how some members of the public are being left without advisors.
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Tug Handley | 27 Jun 2011 2:17 pm
Banks are a business, businesses are out to make profit - that's fine. the old boy network in the city and the untouchable nature of banks has been going on too long. Even the Bankers who have been put in charge of the banks we now own are turning out to be dirtbags. they need jailed the lot of them and send them to a proper prison where they will be "integrated" into a new "old boy" network
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Gillain Heath | 27 Jun 2011 2:19 pm
Yes let the bankers get put in jail and see what loving your fellow man is like - but not in the way that they would like it.....although some of the public school boys prbably will
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Blair Cann | 27 Jun 2011 2:26 pm
Wow, the banks sell aggressively (and not often to a clients's needs) according to the FSA! And what's more, His Holiness is a catholic! And as for bears......
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Anonymous | 27 Jun 2011 2:27 pm
To little to late FSA. If I was that late paying your fees and and making sure all the other paperwork you've got brokers to do is in on time, I would have been de-registered by you.
You (FSA) have been licking the bank's .... umm feet for years.
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