So, once again we are promised a crack down from the FSA on poor advice offered by the banks.
In March, FSA chief executive Hector Sants told the Which? Future of Banking Commission that the regulator was to investigate the effect sales incentives have on the advice given by high-street banks.
Yesterday, Lord Turner took the opportunity offered at the British Bankers’ Association annual conference to let it be known that the regulator would be launching an investigation to ask whether reward structures for in-house sales staff guard against misselling.
Anyone who has read the reams of column inches in Money Marketing and many other titles over the last couple of years exposing the terrible standards of advice offered by some of our high street banks should be able to give Turner a swift answer to that question.
This evidence is backed up by concerns expressed last summer by the Financial Ombudsman Service regarding advice given to elderly customers by bank branch staff. The FOS had received many complaints from elderly people who had gone into their branch to make a withdrawal from a deposit or savings account but ended up with an investment well outside their risk appetite.
This year’s FOS annual report highlighted a group of cases it upheld involving one high-street institution targeting the sale of investment bonds at older customers who were not suited to the investment risk involved.
One of the biggest criticisms of the FSA levelled by advisers is that it has spectacularly failed to properly regulate and clamp down on the poor advice given by some high-street banks.
Turner yesterday promised tough action against firms the FSA finds have incentives, structures or products likely to lead to poor outcomes.
Of course the FSA has had plenty on its hands since Lehman Brothers crashed in the Autumn of 2008, but questions have to be asked about why this investigation has not happened sooner.
We have seen some action against the banks- two were referred to enforcement for poor complaints handling procedures in April while Money Marketing understands that at least one high street bank has been ordered by the regulator to carry out a section 166 review of business as part of the FSA’s pension switching review.
But despite the deluge of fines, bans and censures that have been flying out of Canary Wharf in recent times, banking advice remains relatively untouched.
Evidence to the Which? Future of Banking Commission from ex-banking staff suggests the same hard-sell mentality continues to take place with excessive pressure put on front line employees.
The Which? commission called for the complete removal of commission for front-line bank staff and enforcement action against the senior management who are putting this excessive pressure on workers. Both seem sensible proposals.
But things are unlikely to change unless the FSA really does decide to get tough on the banks. We shall see.
Paul McMillan is the editor of Money Marketing