View more on these topics

Advisers call for FSA to name and shame banks with poor advice practices

FSA Sky Angular 480

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.”

shame

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

There are 5 comments at the moment, we would love to hear your opinion too.

  1. As pointed out by many on here over the years the only way to change this culture was to prosecute senior individuals in the banks top echelons ,but the FSA has never had the guts. In the end the only reason they are stopping advising is profit or the lack of it in a regulated world that they are now realising they are incapable of functioning in . Good news for those that are left but in the long run probably not for the consumers the banks dealt with.

  2. On the one hand, the authorities are happy to name and shame invidual tax dodgers now. Even in cases of a few thousand pounds of tax.

    On the other, poor practices that cost millions are not subject to the same sanctions.

  3. Funny how IFAs always want to hammer bank advisers. It would be interesting if the next mystery shop was on IFAs! I have been in this business a long time and observed perhaps 2500 interviews. The very worst ones were from IFAs

  4. Lets not get carried away here, 89% of the mystery shops were sound. In any walk of life that is an overwhelming majority, isnt there a case therefore for the FSA and the headline grabbing media to be celebrating and reporting this as an overwhelming success.

  5. Poor advice is not restricted to banks. I have seen IFA’s advise clients into dubious, unregulated land-banking schemes….use their SIPPS to bank-role property development schemes etc. There was also a minority providing poor advice in this survey and that will happen wherever you go….

Leave a comment