View more on these topics

Panel beats the warning drum

Spotting the next misselling scandal has become a bit of a national sport in financial services circles.

This time, it is venture capital trusts while what now seems like a hardy perennial, equity release, is also giving cause for concern. The chair of the financial services consumer panel Ann Foster believes that VCTs, given such a boost by the Chancellor in last year’s Budget, could be labelled with the wrong risk by advisers and direct marketers. She also believes that equity release must be sold to the highest standards if it is not to be missold.

So, what is in a warning? Well, the panel is influential, representing as it does the consumer interest to the FSA, and if it has concerns, the FSA is duty bound to note them. The regulator is already acting in terms of monitoring the way in which equity release is marketed and sold. It may also have some concerns around VCTs although it has yet to say so in public.

It is possible that such warnings may feel like a warning too far. Some in the industry probably believe that all it takes is a market to be going well for the consumer lobby to start fretting about missales.

Equity-release providers seem determined to maintain the highest standards possible. VCT providers will surely not want any misselling to damage a burgeoning market.

But in this consumer-driven regulated world, such warnings are simply the context in which financial services professionals must operate.

To recap, Foster said VCTs should be correctly rated in terms of risk and that equity release should be sold with the highest standards of advice. We believe that IFAs will be doing just that so hopefully there will be no problem.

Recommended

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment