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Wheatley: Bank advisers must do better

FCA chief executive Martin Wheatley has set out concerns about the quality of bank advice and warned that banks must work for the best interest of customers.

Speaking at a British Bankers’ Association conference in London, Wheatley said there were many examples of bad practice among bank advisers, among them the sale of five year investment bonds to people “not expected to live past the next world cup”. He said that he wants them and the rest of the industry to “work for the consumer”.

He says: “When a customer looks to you for investment advice, it should never be just an opportunity for your adviser to see their sales commission looking back at them rather than an actual customer with real needs. What our customer expects is for your adviser to look at their personal circumstances, what their goals and aspirations are, and how much they are prepared to risk and then come up with something that is appropriate for them.

“These are simple things, but it is about the customer being able to trust you and know the advice process is working for them.  This is the culture that I want running through your firm and through the industry – we all have to be working for the consumer.” 

He told the conference that the product intervention powers the FCA will have will improve the quality of products. He said it would cause designers to identify a target market and create a product that suits their needs, to test the products to ensure they deliver fair outcomes and to have a robust approvals process in place through which the products go before they are sold.

He added: “And finally, that you monitor the product to see who is buying it and how it is performing.  This is not just about selling it and moving on, but  taking an interest in how it is actually working in practice.”


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There are 12 comments at the moment, we would love to hear your opinion too.

  1. “Bank advisers must do better”.

    Well, hello Rip van Winkle. Welcome to the 21st Century.

  2. Because of course – Every time I see a client who has been sold an investment bond by a bank adviser (Usually with 7% initial commission) that same adviser has always contacted them to offer regular reviews…Not!
    Bank advisers are policy floggers! One sale, no review, advice targeted at whatever their boss needs to hit target that week. When will the FSA/FCA or whoever it is realise this?

  3. @Bolton Adviser

    Yep for sure.

    Bankassurance sales = Investment bond with 7% initial commission. Even Mutual Building Society Advisers are at it.

    Just seen a case as it happens. Didn’t even bother to ask about what other assets the client had – or her need for income.

    Let alone mentioning the use of Trusts –

    ALL he’s done is add to the lady’s IHT Bill but at least he made £3.5K on a £55K investment!

  4. still be commisssion driven salesman post RDR – what changes??

  5. I don’t blame the bank advisers, I blame the banks themselves. They set unacheiveable targets that force advisers to flog products rather that give good quality advice.

    Most bank advisers are not paid via commision but they are rewarded via an incentive scheme. As an ex bank adviser the scheme we had, it didn’t matter which product was sold as you got credit for the amount of the investment made, usually at a rate of 3%. However the bank still took the full 7 or 7.75% initial commission.

  6. The FSA has had the powers to influence the method of determining remuneration for a billion years. OOPS, a bit over the top, must be all these £billions the banks are costing future generations… er.. where was I? Ah yes, it is all down to targets and bonuses, nothing to do with the advice process and the RDR will simply hand more customers over to the above mentioned shysters.

    Quite how the FSA thought it could supervise hundreds of thousands of bank and other DSF salespeople with 5 people per bank is beyond me.

    Adair Turner admitted they got it wrong but nobody fell on their sword did they? Or did they?

  7. Has Martin Wheatley heard of investment bonds put in to trust for beneficiaries in order to limit an IHT liability? Doesn’t sound like it. Also if an elderly persons requirement is to protect their legacy from the effects of inflation for their beneficiaries why should their money be kept on deposit attracting low interest rates. Finally most investments can be passed on via a will and kept until the maturity.

  8. The ideal would be for sales targeting to be banned-there is no way that a professional, ethical service can be offered by somebody who is under relentless pressure to sell.

    I dream of a simple world where Joe Public can trust an adviser to provide a service appropriate to their needs (and cost requirements). I won’t hold my breath…

  9. What naivety

    Oh dear, this poor sod thinks that the banks will take notice of his laudable views.

    Never mind, he will soon realise that the only sector that can provide the whipping boys necessary to justify his ludicrous salary etc. is the IFA sector. Whats left of it.

  10. As a former bancassurer myself, I do recall a product we were supposed to sell. Yes, sell. The saving plan was laughingly called the Regular Investment Plan (RIP). We advisers nicknamed it the RIP off plan. The reduction in yield was more than 7.5%.You can bet that some bank customers finished up with this dreadful policy.
    At the end of the day, a bank adviser needs a job and can only sell what’s in his bag. The managers are the ones who need shooting!

  11. And this guys going to be in charge of what? Ha, Ha Ha, Ha Ha Ha Ha Ha!

  12. The problem comes from the bureaucratic concept that one can have systems and procedures in place that will deliver the best product to the customer.
    As I explained many years ago to a regulatory auditor I could ‘tick all the boxes’ and comply with ‘Best Practice’ but still sell the product I wanted to.
    The only way is to adhere to the principle of ‘Best Advice’ for the client/customer.
    Is what you are proposing the best deal for the client taking account of their present circumstances and likely future needs.
    Martin Wheatley appears to be somewhat nearer to this concept than the current shower at the FSA.

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