View more on these topics

OFT will probe advice to elderly and disabled

The Office of Fair Trading is to investigate the role of IFAs in the misselling of financial services to vulnerable consumers.

The inquiry, launched this week, will focus on the selling of banking, credit, insurance, savings and other financial services to elderly and disabled people. It will also cover low-income consumers and people whose first language is not English.

The investigation will cover the role of IFAs in advising on these products.

Director-general John Bridgeman believes that as financial services become more complex, people are not asking the right questions and are making the wrong choices.

He says: "The consequences of buying the wrong financial products for those on low incomes may be greater than for the more affluent."

PIA persistency figures show that one-quarter of long-term insurance and investment products lapse within the first three years.

The OFT blames this on the sale of unsuitable products with high front-end-loaded charges to low-income consumers.

Its report, expected in summer 1998, will also outline ways of increasing access to financial services.

The financial services industry has come under intense scrutiny from the OFT during the last year. In August, the OFT recommended scrapping commission-based advice and polarisation rules in a bid to force more financial advisers to become fee-based.

The OFT is also reviewing the healthcare market and is expected to publish a report next year.

Recommended

Two-thirds of offices aim to boost marketing

Nearly two-thirds of life offices are worried about the level of demand for their products in the coming year, with a record proportion looking to boost marketing spend. According to a quarterly poll carried out by the CBI and Coopers & Lybrand at the end of last year, 63 per cent of insurers are concerned […]

MMB set to expand ahead of flotation

IFA Moores Marr Bradley is aiming to expand by 20 per cent a year in a bid to gain a stockmarket listing in the next three to five years. The company has changed its name to MMB and launched a new logo which aims to highlight its mission statement of being “One step ahead”. The […]

Rechabite rewards abstinence from the demon drink

An army of teetotallers is set to benefit from a cheap sickness benefits scheme thanks to those scourges of the demon drink at the Rechabite Friendly Society. The society demands that its members sign a pledge of abstinence before being able to take advantage of its products. Despite evidence to show that a couple of […]

Briefs

Do you think life offices should help financially bail out IFAs struggling with the pension review? “I think life offices have a moral obligation to help out IFAs. At the time when a lot of pension transfers were being done, insurance companies projected to us the idea that it would be of benefit to clients.” […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment