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FSA investigates Santander over investment advice

Santander 480

The FSA is investigating Santander over the quality of its investment advice following a mystery shopping exercise, Money Marketing understands.

The regulator published the results of its mystery shopping review into six major banks and building societies earlier today. The FSA said one firm had been referred to enforcement but did not name the firm.

In December Money Marketing revealed Santander had suspended its investment advice service and pulled 800 advisers off the road with immediate effect because they were not fully trained to meet “RDR suitability and processes” requirements . At the time, Santander said the advisers would be put on a six-week “intensive training programme” to bring them up to speed.

All 800 advisers have been summoned to a crunch meeting in Birmingham today.

A spokeswoman for Santander UK declined to comment on whether it had been referred to enforcement. The FSA also declined to comment.

Responding to the FSA’s mystery shop review, a Santander UK spokeswoman says: “We are considering the findings in the context of the significant actions we took in 2012 to prepare for the post-RDR world.  We continue to believe it is important to offer customers access to a broad range of financial products which are suitable to their needs and individual situations, and we are working towards that objective.”

The FSA carried out its mystery shopping review between March and September and focused on the quality of advice given to consumers looking to invest a lump sum. Out of a total of 231 mystery shops, the FSA says in 11 per cent of cases the evidence suggests the adviser gave unsuitable advice, and in 15 per cent the adviser did not gather enough information to ensure their advice was suitable.

The regulator says in response to the review firms have agreed to take immediate action including retraining advisers, making substantial changes to their advice processes and controls for new business, and undertaking past business reviews to identify historic poor advice and put this right for customers.

Lloyds Banking Group is separately being investigated by the FSA following the regulator’s review last September into how sales incentives drive misselling.

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Comments

There are 17 comments at the moment, we would love to hear your opinion too.

  1. Oh dear Santander…can it get any worse. It looks like the PR people there will have a lot of work on their hands again!!!

  2. The way things are shaping up with RDR the FSA will have achieved its end no advice available to the average consumer

  3. The sheer number of cases involved suggests that this is not simply the fault of the individual advisers. Santander’s advice process is so convoluted and their systems so inadequate that the adviser’s job is almost impossible.

  4. The issues here are not

    FSA wanting to achieve the mythical end of “no advice to the average customer” or

    “the advser’s job is almost impossible”

    The real issues here, like it or not are

    The underlying advice given is rubbish
    Advisers are incentivised to give poor advice because the aim is to sell.

    The soooner people stop deluding themselves that the FSA have this bizarre aim of driving advisers out of business the better all round I would say.

    Ian Coley
    Partner
    Medical Investment Services

  5. Having worked for Santander as long as you reach your target they don’t look closely how you do it. Some of the worst offenders go to on become area sales managers.

  6. The FSA have got it wrong. It is not the incentives offered that drive sales behaviors, it is the consequences of not hitting the targets. That’s why so many bank advisers left to become IFAs, they don’t need the nonsense. Maybe the banks should be re recruiting leavers ?

  7. Neil F Liversidge 13th February 2013 at 12:36 pm

    I can’t say I’m surprised. A few years back I employed a girl for about six months with no previous financial services experience. Despite intensive training she was hopeless. I was all set to fire her when Santander offered her a job paying £4k more and off she went. (The only favour a bank’s ever done me!) A month later she was an ‘adviser’!

  8. The set up at banks is this –

    Here is your target. Sell enough stuff to hit your target or life becomes very difficult and ultimately your could be out on your ear.

    The emphasis is there fore on selling and not building relationships. Any model like this is going to incentivise bad practice and that is what needs to be driven out.
    I believe that when a bank is tied to one provider they can not provide individual advice to clients. They are attempting to apply a one size fits all approach. Clearly this results in products being shoe horned into a customers circumstances rather than a customer ending up with the right product.

    I don’t think the banks are ever going to be able to come up with a system that promotes advice over sales. They have too much resting on their advisers selling products.

    To me the future looks like this –

    Banks provide limited advice for protection only (protection is very profitable and they can upskill their banking advisers to offer tied products therefore reducing costs)
    Banks only cater for wealthy clients when it comes to investment advice (think Lloyds current model of £100k+ clients only)
    IFA’s continue in much the same way they have been doing.

    My humble opinion only.

  9. It would be wonderful if some media organisation would publish this information for the public to read. We already know who are the worst offenders amongst the banks and building societies

  10. Don’t forget the poor advisers!

    I worked as an ‘adviser’ for a number of years at Abbey and then Santander and jumped ship when the company lost its way and it became all about the targets and not about customer service. The last straw was when I argued with an area manager about the correct advice I had given a customer to not invest and he said that I was wrong. I said I did the best for the customer based on their needs and he turned around and said ‘It is not about the customer – we have targets to meet!’

    I have many friends who still work for banks in adviser roles and increasingly I am seeing more and more signed off with stress and one who has had a complete breakdown all down to the heavy and hard pressure put on them to SELL not SOLVE.

    It needs to stop for the sake of the poor public but also the poor advisers who are put in the position of needing to either ‘shoe horn’ people into products that are not necessarily right for them in order to hit target or leave if they are not happy with the ethics and pressure and then try and find a role elsewhere in an ever decreasing market or completly change career path which is not always easy.

    This is not going to be an easy one to solve!

  11. What is worrying (but not really very surprising) is that Santander only took ‘significant actions in 2012’ to prepare for the post RDR world!!!

    What were they doing for the years running up to 2012? oh yeah, not giving a frig and flogging as much as they could!

    When will the FSA and the government learn that banks should do banking and IFA’s should be giving advice.

  12. Some typical sniping from the IFA community who need to come down off their pedastal and remember that many could until recently be considered ‘commission based salesmen’.

    Before you all start high-fiving each other, the losers here are the advisers who could be out of a job and the ‘average’ customers who wont readily pay ‘advice fees’ and do not have the capital to interest an IFA – good work FSA!

    Santander HAVE been preparing for RDR as long as anyone. If you think the action they took in Dec 2012 was anything to do with RDR you need to re-read the article above.

    Huge sales targets and disfunctional sales process, made the job for Santander advisers impossible – by and large good people being forced to use poor systems and processes – and now being hung out to dry.

  13. Anonymous | @ 12:36 pm – “…A few years back I employed a girl for about six months with no previous financial services experience. Despite intensive training she was hopeless…Santander offered her a job… A month later she was an ‘adviser’!”

    Must have been more than ‘a few years’, like most employers Santander hasn’t offered jobs to anyone who didn’t have CAS for some time. Perhaps your forte is not int training…… 😉

  14. Love the idea the all IFAs are beyond reproach and all bank advisers are Satans spawn.

    Who are you kidding?

  15. as a bancassurer i only wish i could have sold lehmann brothers, arch cru funds, keydata funds and been around in the good old days of with profit endowments, high commission pensions, 7% initial fee plus trail life bonds only to now preach a holier than thou attitude that most IFA’s have.

    DO NOT expect any sympathy when your turn comes around as it probably will!!!!!

  16. i was at the meeting today, unfortunately we were informed that the bank intends to reduce numbers to 150 inclusive of managers. Only maturities will be seen a bad day for a number of qualty financial advisors who only want to do whats best for the client, do not believe everything you read about poor advice etc i have,many many clients who are more than happy with the professional advice I have given them.

  17. Interesting how when the banks cull the adviser population IFA’s are only too happy to employ them (usually on a commission only basis) and tell them to start by approaching friends and family to ‘rebroke’ their protection policies I.e. churn. Please don’t scream about this not being true as I know three very ethical ex bank advisers who have been through this with three different IFAs in the last six months and are appalled by what they have been asked to do.

    Put your own house in order before you start preaching, without banks to bash the regulators will be after you next

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