The FSA will not commit to a specific review of banks’ investment advice despite the FOS expressing fears about a rise in complaints regarding investment advice given by bank staff.
A FOS spokeswoman says: “Many of these consumers had only gone into the bank branch to make a withdrawal from a savings or deposit account but ended up being advised to take out an investment. It is particularly concerning that even when a consumer had explicitly referred to the fact that their main priority was to protect their capital rather than generate a return, they were still advised to invest in funds that put their capital at risk.”
The FOS received 1,809 investment complaints from people aged 65 or older between April and July this year. This represents 22 per cent of overall investment complaints and compares with 4,163 complaints for the whole of 2008/09. The FOS attributes this rise to bank advisers.
Asked if it will look to specifically review the advice being given by banks, an FSA spokesman said: “We speak to the FOS on a regular basis and where we come across complaints that warrant further investigation, we will factor that into our supervision of firms.”
But Association of Independent Financial Advisers director general Chris Cummings says: “It is no longer sufficient to say it will look at this under the normal supervisory process. It is little wonder that the FSA’s future is at risk when it fails to take action when presented with clear evidence of wrongdoing.”
In April, Money Marketing revealed adviser concerns about advice given by Barclays advisers to elderly investors to invest large sums in Aviva’s global balanced income fund.
In March, Money Marketing revealed concerns from Alan Steel Asset Management that bank advisers were selling corporate bond funds to savers hit by interest rate cuts without properly explaining the risks.
British Bankers’ Association executive director Eric Leenders says that 1,809 complaints is “a relatively low number compared with the millions of bank customers of this age group who save”.