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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.


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