Advisers are calling for the FSA to name and shame banks and building societies that were found to have given poor investment advice during the regulator’s mystery shopping exercise.
Last week, the FSA published the findings of its mystery shopping review carried out at six banks and building societies between March and September. Of a total of 231 mystery shops, the adviser gave unsuitable advice in 11 per cent of cases and the adviser did not gather enough information to ensure the advice was suitable in 15 per cent of cases.
Plan Money director Peter Chadborn says he is not surprised by the FSA’s findings. He says: “The ultimate test would be to repeat the mystery shopping exercise now that the RDR has been implemented. The trouble is there may not be many banks and building societies left to survey that are still offering mass market advice.
“We have to acknowledge the fact the FSA is at least doing something to tackle this, but the question is what will the regulator do next? It should name and shame those firms at fault.”
Thameside Wealth director Tom Kean says: “Some of the examples of poor advice given are unforgivable and simply show there is still a long way to go. My fear is bank customers will be put off from seeking advice from both the banks and IFAs, and will simply either give up or invest themselves without necessarily having the appropriate knowledge.”
Kean argues the RDR may not prevent the poor advice revealed by the mystery shop as many banks have set up charging structures which are dependent on product sales.
Facts & Figures Financial Planners managing director Simon Webster says: “It is testament to the failure of regulation that this sort of poor advice remains endemic within the banking sector. It reminds you why an initiative like the RDR was needed in the first place.
“The FSA needs to take action against the individuals responsible, even if this is the chief executive or the senior management.”