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Barclays, consumer clarity and the RDR

The standard of advice given by Barclays’ “financial planning managers” and uncovered by Money Marketing this week appears alarming to say the least.

Partner House Financial Services partner Richard Davis says he has six clients, formerly with Barclays and all approaching or in-retirement, who were advised to cash in their investments and transfer their Isas into the same single unit trust- the Aviva (formerly Morley) balanced global income fund.

You can read about the outcomes here and here .

The fact these clients saw different Barclays advisers suggests they may not be isolated cases. Since printing the story Money Marketing has received several more complaints from advisers regarding clients in a similar situation.

The evidence raises question marks over Barclays’ defence of its “best of breed” multi-tie model it has claimed rivals independent advice. It also goes to the heart of some of the dilemmas the FSA is grappling with as it finalises the Retail Distribution Review and tries to ensure clarity of service to the consumer.

A couple of years ago, on-board PIMS, a sales director at Barclays Financial Planning boasted to me that the firm was drawing up plans to dominate the IFA marketplace and that Barclays was “coming” for IFAs clients.

At the time, late June 2007, he said the 900 or so Barclays advisers were about to embark on a new training programme aimed at improving TCF standards and replicating the service offered by IFAs. If the advice we have seen in these particular cases is anything to go by the training was not too successful.

Speaking to advisers in one of the bars onboard later that evening the sentiments were laughed out of town, familiar statements of intend that had been heard again and again throughout the years. But the laughter was tainted with a certain anger that the firm thought it could simply come along and take significant IFA market share without being the true agent of the client.

Move forward in time to last November’s RDR paper, where the FSA rolled back from its original intention of creating a sharp distinction between advice and sales and instead will investigate a “sales advice” type channel.

The FSA’s work is now focused around how best to differentiate this channel from truly independent advice and make clear to consumers the difference between the services.

The trouble is this is far easier said than done with Barclays being a prime example. The name Barclays Financial Planning associates the firm with the top end of the IFA market with its website promising “the best financial planning service available”. I’m sure more than a few Institute of Financial Planning members would have something to say about that statement.

The Barclays sales director on board PIMS was also at great pains to stress the firm was looking at training all its staff to certified or chartered level as part of this focus on training. The implication was that if advisers are trained up to that standard it does not matter that they are not operating on a whole of market basis.

The FSA’s November paper suggested that anyone operating under the sales advice (or whatever it will be called) banner will have to be trained up to the same standards as IFAs. This is a welcome move but it does not mean the FSA should take its eye off the ball with regards ensuring clarity of service offered to the consumer.

The FSA’s research into Critical Illness Cover, published yesterday , again highlights the regulator’s dilemma. It found around 70 per cent of people who bought a product through a direct channel thought they were given advice. The FSA has warned over this “grey area” over what constitutes an advised sale.

If this is causing confusion how hard will it be to ensure clarity between sales advice and whole of market advice, especially if certain firms will be doing their best to piggy-back on the good name of IFAs without having to bear all the responsibility?

The issue of clarity of service has been an albatross around the FSA’s neck since its botched depolarisation plans. What should it do? Return to its plans for a strict advice/sales split? Can a sales advice channel work and how should it be labelled? Let me know your thoughts below.


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There are 10 comments at the moment, we would love to hear your opinion too.

  1. Advice, Sales or Corporate Greed
    I do not support the distinction between sales and advice. The FSA review of CI sales highlights that there is no such division in the minds of consumers.
    All sales include advice of sorts unless the adviser is a mute amputee. We should not be aiming to distinguish between two apparent extremes which do not exist. As the Barclay’s ‘advice’ highlights it simply comes down to the quality of the advice/sales.

  2. Is an IFA truly an IFA
    Can an IFA truly know all of the ins and outs of such a vast amount of products enough to make a true recommendation? I don’t believe for one moment that if there were 2 similar products suitable for a customer that an IFA would not be swayed towards the one paying the higher commission

  3. Barclays, clarity & the RDR
    The FSA couldn’t regulate a wine tasting at a vineyard. All it does is come up with endless but mostly useless and impractical initiatives to justify its own existence and charges the industry a fortune for the privilege of suppprting it.

  4. My partner works for Barclays!
    Although my partner is only a Counter Manager, she, and her colleagues are targeted to obtain appointments for the financial advisers. They actually obtain an incentive of £15.00 per appointment! If appointments are not obtained a member of staff is placed on a Personal Improvement Performance(PIP). It is a small wonder, therefore, if members of the public are railroaded into sales appointments with so called financial advisers, who claim to be independent!

  5. RDR
    its the FSA who need to have clarity wth regard to the RDRwhich seems biased towards the bank sales. WHy when the vast majority of complaints come from this area and yet they are trying to drive the IFA away from the man in the streetwho needs advic but probably does not to pay for it directly.
    Why not put a cap on the commission paid by the provider to level the playing field

  6. FSA plonkers!
    How many times do we have to tell the FSA not to meddle with the IFA market, the model has worked for the 35 years I have worked in it. We have had Lautro, Fimbra trying to distinguish who is Independant and who is tied, CP121, depolarisation / polarisation, the menu, RDR, they haven’t listened and they and they still cannot get it right. I WILL SHOUT OUT WHAT I HAVE SHOUTED OUT FOR YEARS! HELLO ANYONE AT HOME INDEPENDANT FINANCIAL ADVICE IS WHOLE OF MARKET, TIED OR MULTI TIED ARE SALESMEN NOT INDEPENDANT ADVISORS. The FSA, (Bankers friends) have been trying to destroy the IFA Market for years, I just wish they would be honest and admit it.

  7. Barclays Sales Staff
    As has been said many times, what a wunch of bankers

  8. The FSA
    I have now been in the industry for 26 years, & am at the point of retirement. All that I intend to say is: Thank goodness. It is most apparent,, as another reply indicates, that the FSA are pro-banks & their employees & anti-IFA’s. Why, I cannot understand. More complaints are received from customers having received advice from bank IFA’s or tied / multi-tied advisers (96%) than true IFA’s (4%), who, in the main do an excellent job with clients. Isn’t it about time that IFA’s stood up to the FSA and said “Enough is Enough”. We have seen, particularly over the past 12 months or so, how the FSA has made one blunder after another, and are main contributors to the global meltdown that we now find ourselves in. And they are try to tell us what we do wrong, & how to do things correctly??!! And next on the agenda….”Global Regulation”. I agree with this but, for goodness, don’t let the FSA be part of it. In my 26 years I have seen a very good industry, albeit with faults, stagger & almost collapse under the strong arm tactics of the FSA, hitting the little guy who could not fight back, but ignoring the big guys (banks) who could. Why, because it made it look as if the FSA was doing its job properly, when it wasn’t. And, because a large number of FSA employees are (still) ex bank people who have a vested interest & have been “placed” there. My final comment as I retire: To the FSA & Banks. I don’t wish to be part of your charade anymore, your lies & deceipt & lack of professionalism, knowingly misleading the public.

  9. To anon at 16.18
    IFAs do not claim to know all products, we look at what we can find and sue what we know to compare and contrats products and if a client finds something new for us, we will compare and advise on that. To insinuate that adviser choose the one that would pay higher commission just goes to show how out of touch you are with how most IFAs work as most quote for what the advice/work will cost and then offset whatever commission (if any) is paid against any product arranged. In about 10% of cases now, it ends up a charge for advice with NO product sold as explaining to a client why they should NOT do something takes MORE work, not less and involves a risk to us against our PI insurance whether a product is sold or NOT.

  10. This is why I left Barclay’s as a Financial Advisor…I am an Advisor with another bancassurance and I am top in the Country because I do my Job as an advisor not a Sales Man. This is what a manager said in a meeting once at Barclays ‘put the sales on, put the sales on forget the risk’ When I tackled it with his regional Manager he turned a blind eye – RDR is a joke and a tick box excerise.

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