View more on these topics

Advisers say Barclays fine is a ‘damning indictment’ of bank sales

Advisers say Barclays’ £7.7m FSA fine for misselling Aviva’s global balanced income and global cautious income funds is “a damning indictment” of the banks’ sales-driven advice models.

They say the 12,000 Barclays clients who invested £692m in the Aviva funds should have visited an IFA.

Institute of Financial Planning chief executive Nick Cann says: “The fine is a damning indictment of this advice and the process that was followed by this organisation and its advisers.

“It also raises questions about other bank advice models. While the organisation was fined, there is no mention of individual accountability as there was, for example, in the Park Row case. There has to be a level playing field and the consumer deserves better.”

Derbyshire Booth Financial Management managing director Greg Heath says: “As a small IFA, we come across a lot of disenchanted investors like these. We cannot figure out if the cause is poor training or the pressure that bank staff are put under.”

Informed Choice managing director Martin Bamford says: “We have long held the belief that banks have an underlying sales culture. With all the publi-city associated with this, we hope people will realise this is about bad bank selling, not bad advice.”

Verity Wealth Management chartered financial planner Stephanie Pickering says: “Too many clients think you can just walk in and get free advice from a bank. I have to tell people that they are not getting advice, they are getting sales.”

Yellowtail Financial Planning managing director Dennis Hall says: “The misselling would not have happened in anything like the same kind of numbers” if the clients had used an IFA.

Recommended

Final frontier

John Kenchington says more exotic regions could lead emerging markets over the coming year

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

There are 31 comments at the moment, we would love to hear your opinion too.

  1. The relevant CF1 CF3 and CF8 at Barclays should be personally fined in accordance with the responsibilities that they have accepted and be banned from holding office. If they were IFAs that’s what would have happened

  2. Banks are a ‘sausage factory’ whose advisers are only order takers trying desperately to perform in a sales culture environment. I had a meeting with my Account Manager at a certain bank that has a black horse, when the Account Manager realised I was an IFA we discussed jobs. He informed me his Manager rings him 3 times per day and at the weekends wanting sales figures!

  3. I met a fellow IFA a couple of years ago who said he had a friend working for Barclays who was doing very well but he said she was always under intense pressure to sell and achieve sales targets.

    If successful advice is measured only by sales then that is what you will get.

    RDR will not change that.

  4. I have worked both as an IFA and as a tied adviser in the bank – whilst I agree there is a certain amount of personal accountability for the individual advisers – there is a bigger cultural issue. Often product providers – labelled as ‘strategic partners’ (meaning they’ve coughed up some money for a senior management jolly) are wheeled in at sales meeting and the advisers are told to sell this product as it is either 1. easy to sell as an alternative to deposit based monies – eg hi Mrs Smith this will earn you 6% per annum as opposed to the 0.01% you are currently earning in your ultra high interest account, or 2. it pays 8% commission to the adviser, though it is not couched in that language of course, as banks do not work on commission, or so they tell clients.

    It is therefore more often than not a top down led culture, and a fear culture – the National sales manager boots the regional sales managers, the regional sales managers boot the area sales managers who in turn boot the branch based advisers.

    I was at a meeting once where the RMD announced that as at the end of the next quarter the bottom 25 advisers – based on the league table of completed business – would need to re-apply for their jobs – and that was what he called an incentive….

    He is probably now working in a nice job in the FSA……..

  5. Anonymous – “when the Account Manager realised I was an IFA” – Your account manager made an appointment and didn’t know you were an IFA BEFORE the meeting? Incredible! And that says it all about the poor quality of account managers the banks employ!

  6. £7.7m fine on profit figures on £11.6bn for 2009 (declared Feb 2010) and likely to be the same this year … is a fine of just 0.06% of profit …. hmmm put another way, based upon a 200 day working year (for bankers that is, not us hard working 365 day IFAs) … that is 0.12 days profit i.e. 2.88 hrs profit .. On these fine levels, with no director personally accountable and no personal fines or indeed the FSA not being held to account, I suspect most banks will continue to factor fines into their profit models i.e. ignore good practice and keep the gravy train rolling.

  7. Hey don’t worry. RDR will put an end to this, with all advisers having reached Qualification level 4 the word misselling will be removed from the Oxford English Dictionary!

  8. Not just Barclays. I worked for Nat West.

    I saw 3 advisers have health breakdowns last year, one regional manager leave to go to another bank to ‘further his career’ as the allegations of bullying became too many and too loud, and 2 area managers ‘step down’ when targets weren’t reached. I can remember how many times as a team we were told to consider ‘whether we were in the right job’ if targets were not achieved.

    The unions ?They stood by and did nothing except make sure the correct dismissal proceedures were followed. Toothless tigers ! No wonder staff don’t join.

    If the public really knew what went on inside their bank they would take their money and put it in a tin under the bed. Time to ditch the short, balding men with big egos that run sales teams and drag the culture of leadership screaming and kicking into the year 2000 +

  9. If we are all that worried about this as miss representation of advise. maybe one of our body’s should run a campaign to get greater awareness of the facts?

  10. Incompetent MPs Award Team 19th January 2011 at 3:22 pm

    Take note Hoban. You are supporting the rogues. Are you one of them?

  11. The hard sell culture will not change if RDR comes into force as the FSA seems to think that banks always treat their customers fairly and can do no wrong. Ifa’s on the other hand it thinks are unscrupulous ill educated morons who only sell products for the large commissions offered. Banks dont take commission ah ah or pressurise the staff on targets and the cow jumped over the moon

  12. “Let he who is without sin cast the first stone”

    Based on the FSAs findings, there are good and bad advisers in every type of finacial adviser set-up. This includes high street IFAs, large networks and the banks but not all advisers are the same.

    It’s funny how IFAs are quick to critisise their biggest threat, when the advisers who work for the banks never gloat when a smaller IFA firm is disciplined or closed down by the FSA.

    Perhaps the IFAs who enjoy “Bank Bashing” are those trying to divert scrutiny from their own activities and/or haven’t got a chance of obtaining the diploma.

  13. Green Eyed Monster 19th January 2011 at 3:41 pm

    Lets not assume heads will not roll at Barclays.

    its such a large organisation they probably have to wade through the list of offenders and then agree with FSA who should be sacrificed. It may not just be the man in charge of investment sales.

  14. Has anyone not worked for a small IFA where the owner is the main man and what he says goes? The environment is no different to the less than professional sales at all costs environment that some are now criticising the Banks for – I have worked at both and it still boils down to those who are professional and ethical and seek to put the client first and sadly you get good uns and bad uns in both

  15. The Banks have a sales culture that still has its roots deeply entrenched in the 1970’s double glazing sales concept. Mr Hoban it is about time you got real! Open your eyes, the banks are nothing but a money making machine!

  16. Couldn’t possibly believe £692,000,000 invested at 4.5% initial commission had any bearing.
    After all, Barclays would only have ‘trousered’ £31,140,000 from the single exercise.
    It’s us bl**dy IFA’s who do all the damage, not the dubious parentage banks…….so says the FSA.
    Oh well, RDR will bring and end to all this, not!

  17. “Has anyone not worked for a small IFA where the owner is the main man and what he says goes? The environment is no different to the less than professional sales at all costs environment that some are now criticising the Banks for – I have worked at both and it still boils down to those who are professional and ethical and seek to put the client first and sadly you get good uns and bad uns in both”

    AND THEREFORE REQUIRING ADVISERS TO TAKE FURTHER EXAMS WILL NOT CURE THIS PROBLEM

  18. Walking into a Lloyds/RBS/HSBC/Barclays etc is now no different to walking into a Carphone Warehouse !!

    Customer’s need to look at Bank staff the same as mobile phone sales people !!

    If you are approached in the banking hall it means one thing they are trying to flog you something

    The publics mind set needs to wake up and smell the coffee.

  19. We all make mistakes but this is one of the biggest I have seen.

    A number of advisors that I know work behind the scenes to obtain compensation from the banks (in particular) when clients are abused for want of a better term.

    I have personally dealt with two blatant abuses of clients in the last two years.

    Whilst I know some independent advisor are also guilty of miselling/poor advice perhaps it is time we as an advisor community started showing some of these cases to our MPs etc to get them onto how bad the institutions are and how much better we are.

    Like everything else in our industry too often we do not shout about the good we do, it is always the negative aspects.

  20. It wasn’t so long ago that the FSA was making noises of discontent about advisers being driven to meet targets. Wasn’t that a central plank of the whole TCF thing?

    Clearly these concerns didn’t extend to banks, because they’ve all carried on hard-selling this month’s high-commission Investment Bond, just as they’ve always done.

    The only reason the FSA has finally inflicted what is, let’s face it, hardly more than a fleabite fine on Barclays is because the scale of this latest mis-selling exercise, compounded by Barclays’ equally reprehensible mass fob-off of complaints, is so huge that it simply couldn’t be seen not to act.

    Just how suffocating is the stench of favouritism going to have to get before somebody senior at the FSA has the guts and integrity to stand up to the Treasury and say We’re not going to put up any more with you forever pulling our strings and telling us to turn a blind eye to the activities of the banks?

    It’s all very well various people at the FSA churning out the same stale old mantra that the banks are subject to the same rules as IFA’s, but clearly the application of those rules is a rather different matter.

  21. Barclays, they’re full of Diamond geezers!!

    Provided there is have an American style ‘team chant’ when they arrive in the morning, their slaves, oh sorry employees, are company through and through then who gives a s**t what they do to their ‘targets’, oh sorry customers’ provided they’re making big bucks.

    Loving their Treat Customers Foul approach to finance.

    Isn’t this how it works in a bank??

    Where are panoramo to point out this crap to make consumers aware??

    Do the BBC attend the bankers functions too??

  22. Bank bash all you like.
    I have worked as an IFA and now work for a bank.
    I am fed up of meeting clients who say ‘I have an IFA’ and it turns out they have investments that havent been reviewed in years.
    I deal with High Net Worth clients who’s IFAs haven’t informed them of the anti-forestalling rules; or haven’t advised them on their business obligations regarding NEST etc. Only yesterday I found I had saved a client £180k as both their IFA and accountant had neglected to tell them they would qualify for entrepreneurial relief. They went back to their accountant who said ‘oh yes’. Guess what I am picking up their business not the sleepy IFA who hadn’t a clue.
    There are very few IFAs who understand advising businesses but quite happy to pinch my ideas when their client out of courtesy calls them, muck it up, and I have to deal with rectifying for the client.
    There are poor advisers on both sides of the fence – and the majority of people either can’t afford an IFA or the IFA doesn’t want to take them on as they are not worth enough to do so. The mass market (and the ‘wealthier’ mass market) do need an alternative to the IFA.
    Competition is never bad for anybody – if you are good at your job you don’t need to be afraid of the competition. And how many IFA’s will be lost due to RDR – at least I know I have already completed all my qualifications – both at top levels pre RDR and have taken and passed the R papers now rather than rely on CPD or whinging like so many in the industry seem to

  23. Amongst the wide range of differences between banks and IFAs, which the FSA remains blissfully unaware of, is the personalised service IFAS provide.

    How many occasions will a bank customer see the same individual? Building a client/adviser relationship within the retail bank environment is next to impossible.

    No surprise that bad advice is rampant, IFAs would have no clients if they acted this way.

  24. I worked for an estate agent, part of HBOS, for 8 years. My boss ran meetings where only sales figures were discussed. The advisers sold, and I mean sold, a PEP and a bond to almost anyone they came in contact with (8.25 commission on the bond and 3% on the PEP).
    Because I had other views about what was the right advice, I was constantly made to look a poor adviser as my sales were lower than those around me. The boss almost encouraged my peer group to take the mickey out of me, again putting on more pressure for sales.
    In the end you either succumb to the pressure or you leave. I eventually left.

  25. “Your account manager made an appointment and didn’t know you were an IFA BEFORE the meeting?”

    Why should your bank manager know what your job is? I suppose it might be on the application form but who on earth bothers to tell their bank when their job title changes?

    Anyway, good article, but it’s preaching to the choir. In fact, it’s not even preaching to the choir, it’s preaching to an assembly of other preachers. It needs to be in mass-market newspapers, and not just in the Money supplement on Saturday either.

  26. Anonymous | 19 Jan 2011 7:11 pm

    If you are that good why are your working for a bank? is it the ‘easy pickings’? Spent so much time getting qualified that you failed to prospect? Were you running your own IFA practice? Are you now tied? Does it go against the grain?

  27. I know we all throw vitriol at Banks, but sometimes I think we should take a step back and aim a little better.
    The rational of a large shareholding organisation like a Bank is to make money, and it will not do that without a strong sales ethic. That goes for any large organisation. So to blame them for selling is somewhat naive.
    The direct sales arms of large insurance companies had a similar approach in the past. Perfectly understandable, and also perfectly understandable when the companies ditched the sales forces when they became an uneconomic burden due to the cost impact of regulation.
    It is quite possible for the banks to increase the “ethical” behaviour of their advisers, but at a cost.
    If the profitability of banks shows any significant fall because of the increase in the base line there will be an outcry from investment fund managers and other shareholders. So banks will need to consider whether the benefits of providing financial advice, more easily described as selling products, is a profitable area of business.
    Note that because of these conflicting aims there are not too many financial service companies that are quoted companies. it is possible to reconcile, but not easy; and the financial services industry is not noted for its management skills.
    If the banks do pull out of financial advice a lot of their “advisers” may well do something else, for this industry is not a particularly nice place in which to operate currently. The end result could be a dramatic fall in the number of advisers of all kinds, with the end user, popularly known as the client, suffering most.
    I would agree that the banks are wide open to criticism on their financial advice side, but that may be because they are being compared with IFAs in the advisory category. They are not necessarily comparable entities.
    Whilst the problem arises from time to time, I cannot say that I have ever really felt strong competition from the Banks. They appear to operate in a different sector of the market, with different aims.
    Our vitriolic aim may be better directed in having the Banks reclassified, with the FSA being forced (I know, an impossibility) to treat them as a totally separate entity. And then tailor the regulations in a more focused fashion, which may then be more effective, and cost effective.
    I believe most Advisers would be a lot happier if there a clear and meaningful distinction between Advisers and Banks, so that consumers were also clear about the distinction. Just as they are clear about the distinction between Advisers and SJP!! I know, a difficult aim.
    I say all this because I am not convinced that losing the Banks from providing financial serves would be altogether beneficial, for a large part of the consumer market could be denied access to financial products. There are not enough IFAs to fill the gap, and under the current regulatory regime it is unlikely they could fill that gap economically.
    If a vacuum is created, something will fill it, and that may not be as acceptable as having Banks. Nasty thought. Could be we look back and think “Better the devil we know”.

  28. Retail banks are great at:

    1. Bank statements (!)
    2. Sending out lots of marketing mailers
    3. Sponsoring events
    4. Applying bank charges

    They are not so good at:

    1. Lending money
    2. Investing money
    3. Knowing their clients

    For the life of me I cannot understand why they think they would be any good at anything as complex as

    1. Financial Planning
    2. General insurance
    3. Administering Estates

    ££££££££££££££££££££££££££££££££££££££££££££££££££££££££££££££££££££££££££££££££££££££££££££££££££££££££££££££££££££££££££££££££££££££££££££££££££££££££££££££££££££££££

  29. hoban is one of them probably even discusses the level of fine with the banks in order not to up set them.

  30. Lets not kid ourselves here folks. This article and related comments implies that banks give poor advice and IFAs give good advice. Having worked on both sides of the fence this is a ridiculous assumption to make. In each area of financial advice/sales there will be good and bad apples. The bank I work for is incredibly tight in terms of the scrutiny of advice given. So much so that as advisers the amount we can suggest for investment would be far lower than an IFA would be able to recommend. We also have very strict guidelines on who we can and can’t make recommendations to. Articles like this are too misleading to customers if they are not based on fact.

  31. I work for Barclays Bank as an adviser (or did till last week) and the target of investing £420,000.00 per month to validate (or life/pension premium equivalent) is hard. It is even harder when you try and do the right thing by using Jupiter, Fidelity, Schroder, Blackrock and JP Morgan which “takes time!” The bank has slowed down on Structured Products through Woolwich Plan Managers (Barclays Wealth) because of the FSA clamp down in May. Instead recommendations are made into “Capital Protected” investment bonds which charge 6% initial, instead of a Structured Note paying 3-3.5%- NICE MOVE! At times, 400k is going into Aviva Guaranteed Fund/Prudential Protected Cautious, it is a disgrace!

Leave a comment