In a report into the failure of the Icelandic banks, published over the weekend, the Treasury select committee says it “would have expected offshore savers using independent financial advisers to have been advised of the changing risk profile of their savings”.
It says it will be exploring further the role of advice to customers in its forthcoming inquiry into the banking crisis.
The committee was critical of the FSA over its failure to act appropriately on the concerns raised by Singer & Friedlander chief executive Tony Shearer about the takeover of S&F by Kaupthing.
It says: “While the FSA appears to have investigated these concerns, this episode shows the paramount need for the FSA to be open to those that may wish to contact it to register their disquiet over problems they encounter in financial markets.
“We also note with great concern the impotence of the FSA to tackle directly the concerns brought to its attention as a consequence of its lack of any jurisdiction.”
The MPs have called for charities that have lost money as a result of the Icelandic banks’ collapse to be compensated, but no cash for local authorities or British citizens.
Aifa director general Chris Cummings says: “We are disappointed that the select committee did not feel that IFAs brought the changing risk profile of Icelandic banks sufficiently to clients’ attention as we feel that steps were taken to ensure this happened.”
Worldwide Financial Planning IFA Nick McBreen says: “It is easy to point the finger at the advice community and say, you should have seen it coming, but that is unfair. However that does not take away from the fact that advisers have a duty of care to conduct due diligence and monitor all accounts, whether they are held on or offshore.”