FOS Sounds Alarm Over Bank Advice

Myrmidon_J

Aifa has called for an FSA investigation into bank advice after the Financial Ombudsman Service voiced concerns over an increase in unsuitable investment advice given to elderly people.

The FSA will not commit to a specific review of banks' investment advice despite the FOS expressing fears about a rise in complaints regarding investment advice given by bank staff.

An FOS spokeswoman says: "Many of these consumers had only gone into the bank branch to make a withdrawal from a savings or deposit account but ended up being advised to take out an investment. It is particularly concerning that even when a consumer had explicitly referred to the fact that their main priority was to protect their capital rather than generate a return, they were still advised to invest in funds that put their capital at risk."

The FOS received 1,809 investment complaints from people aged 65 or older between April and July this year. This represents 22 per cent of overall investment complaints and compares with 4,163 complaints for the whole of 2008/09. The FOS attributes this rise to bank advisers.

Full story: http://www.moneymarketing.co.uk/cgi-bin/item.cgi?id=191949&d=340&h=341&f=342

This time it is not consumers, consumer organisations or IFAs who are voicing concerns about unscrupulous bank advisers; it is the Financial Ombudsman Service!

1,809 complaints from people aged 65 or over attributed to bank advisers: I dread to think what the total number affected might be.

(This only measures actual complaints - obviously.)

Yet more evidence that carefully avoiding banks as though they were pox-ridden, mutant zombie-vampires with a taste for blood and a sharp machette. represents sound financial advice.

Run away!

Association of Independent Financial Advisers director general Chris Cummings says: "... It is little wonder that the FSA's future is at risk when it fails to take action when presented with clear evidence of wrongdoing."

And this is so true.

The FSA is spineless, toothless and utterly inept.

It is one of Gordon Brown's most spectacular failures - and there are plenty to choose from.

dunstonh

Whilst its good to see the FOS come out and say it, it is something that we have known for years.

What happens, is that in years that follow stockmarket crashes, complaints on investments go up. In good years, no-one complains even if the risk is wrong as they are making money. It's times like these that you find out who is correctly advising according to risk profile and who isnt and its clear that the banks are not. It should be seen as an opportunity to weed out bad sales reps and bad training and processes (and more often than not the extreme pressure bank sales reps are often put under by management to sell and hit targets) and not ignored.

What will probably happen is that the FSA will do nothing, we will get a few years of growth, complaints will drop naturally because of that and the FSA will then claim that their actions saw a reduction in complaints.

Myrmidon_J

Which? blasts bank advisers

Which? has warned of a sharp increase in elderly people complaining they have been missold investment products by bank advisers, echoing the concerns of the Financial Ombudsman Service.

...

Which? says if it continues to receive such a large number of cases, it may consider complaining to the FOS itself on behalf of the customers.

Full story: http://www.moneymarketing.co.uk/cgi-bin/item.cgi?id=192331&d=340&h=341&f=342

Bank advisers appear to be preying on the elderly in order to boost flagging sales and squeeze some profitability out of their lemon-products... I think this is an institutional failing:

"Which? says it has received calls from clients of Alliance & Leicester, Bradford & Bingley, the Co-operative Bank, Legal & General and Barclays."

How many other banks encourage such practices?
Just say no! (To bank advisers...)

dunstonh

Yesterday, my PA gave me details of a new client that had been sold an invesmtent bond of £20k by Barclays (with Aviva). Yet no ISAs had been recommended and the client wasnt even aware it wasnt a savings account. It was sold as a savings bond. The same client had also been sold an Unit Trust with Fidelity at Alliance & Leicester for a lump sum.. Not an ISA and it was set up on a regular basis rather than single premium. It turns out that A&L pay their bonuses on an premium basis that favours regulars over singles. So, a double mis-sale on that front.

Locally, I find A&L and Barclays are the worst offenders and frequently find bad advice from them. Usually it is favouring of bonds over ISAs and poor risk assessment. I have put in 4 complaints about A&L advice in the last 12 months.

oxenryd

I still don't understand why "Bank Adviser" is still tolerated. The FSA should insist (make it a rule, not a stupid guideline) the word Sales is in job title.

StevieJ

dunstonh wrote: »

Whilst its good to see the FOS come out and say it, it is something that we have known for years.

What happens, is that in years that follow stockmarket crashes, complaints on investments go up. In good years, no-one complains even if the risk is wrong as they are making money. It's times like these that you find out who is correctly advising according to risk profile and who isnt and its clear that the banks are not. It should be seen as an opportunity to weed out bad sales reps and bad training and processes (and more often than not the extreme pressure bank sales reps are often put under by management to sell and hit targets) and not ignored.

What will probably happen is that the FSA will do nothing, we will get a few years of growth, complaints will drop naturally because of that and the FSA will then claim that their actions saw a reduction in complaints.

Or as WB has said:

“Only when the tide goes out do you discover who's been swimming naked”

Myrmidon_J

oxenryd wrote:

I still don't understand why "Bank Adviser" is still tolerated. The FSA should insist (make it a rule, not a stupid guideline) the word Sales is in job title.

I think that's the absolute minimum that should be tolerated...

But as we all know, the FSA is useless, toothless, spineless and quite flaccid in its approach. It is the tool of goverment and ultimately serves the interests of the big players: banks and insurers.

Not consumers.