Innappropriate Investments

dunstonh

Rollinghome wrote: »

You almost say that as if you believe it. You're a natural.

The FSA have said that.

So you agree with Meeper that there are dodgy sales?

You would be stupid if you thought otherwise.

Banks might not pay their staff commission, but I bet they pay staff a bonus for products they flog to the public. I think in that case bonus and commission are really the same thing.

They are not the same thing as the commission actually paid by the provider does not reflect the remuneration package by the bank. The biggest problem with the banks is the sales pressure put on the staff. They are threatened with their job if they do not achieve targets.

You must be paid by an IFA organisation to post on this website?

What is your excuse then?

SnowMan

dunstonh wrote: »

He is right. With advised cases, commission has never been found to create any widespread issues.

To me that's a bit like someone saying the moon landings didn't occur.

The only difference is that there must be a very small chance that the moon landings didn't actually happen

dunstonh

To me that's a bit like someone saying the moon landings didn't occur.

You are ignoring the key word in the sentence (which is the word the FSA used in their findings). That is "widespread". i.e. they could not find widespread abuse. However, that doesnt mean there was not pockets of it and we all know there have been cases of it. You certainly cannot say it was widespread though.

SnowMan

dunstonh wrote: »

You are ignoring the key word in the sentence (which is the word the FSA used in their findings). That is "widespread". i.e. they could not find widespread abuse. However, that doesnt mean there was not pockets of it and we all know there have been cases of it. You certainly cannot say it was widespread though.

The mis-selling of pension transfers and opt-outs and the mis-selling of endowments by IFAS wasn't widespread?

darkpool

dunstonh wrote: »

What is your excuse then?

I just want to present a different viewpoint from the "perp high income has done well" brigade.

I think in this country financial knowledge is pretty low and the financial services industry takes advantage of people's lack of knowledge. A lot of posters here seem to think that IFAs hold some special knowledge of the financial markets - but the truth is they don't

dunstonh

The mis-selling of pension transfers and opt-outs and the mis-selling of endowments by IFAS wasn't widespread?

No. Both affected a minority of people who had those products. Also, the person involved in setting up the pension review has said with hindsight that people were getting paid redress who had no entitlement to it and the chances were the same happened with endowments (mainly as it was so easy to get a complaint upheld that the policyholder could tell a bunch of lies and get paid out).

In the case of pension transfers, it was usually the information supplied by the actuaries that led to the advice. Hindsight told us that the actuarial assumptions were wrong. However, if was the advisers that carried the can. Not the actuaries.

You are also going back a very long time by looking at pre-regulation to just after regulation started. If you move on since then, there hasnt been any widespread issues. And as you specifically mention IFAs and not FAs, then IFAs didnt do anywhere near the same volume of endowments.

SnowMan

dunstonh wrote: »

No. Both affected a minority of people who had those products. Also, the person involved in setting up the pension review has said with hindsight that people were getting paid redress who had no entitlement to it and the chances were the same happened with endowments (mainly as it was so easy to get a complaint upheld that the policyholder could tell a bunch of lies and get paid out).

In the case of pension transfers, it was usually the information supplied by the actuaries that led to the advice. Hindsight told us that the actuarial assumptions were wrong. However, if was the advisers that carried the can. Not the actuaries.

You are also going back a very long time by looking at pre-regulation to just after regulation started. If you move on since then, there hasnt been any widespread issues. And as you specifically mention IFAs and not FAs, then IFAs didnt do anywhere near the same volume of endowments.

The simple issue was that advising the client to leave their deferred pension in the company pension scheme paid the commission based IFA no commission, advising them to transfer paid them huge commission. It really was as simple as that. There was no way the commission based IFA was going to advise people to stay put in their company scheme. I remember when the review was going on an IFA telling me, and fair play to him for his honesty, that advising the client to transfer 'was the only way to put money on the table for his wife and kids'.

It was the huge commissions that the IFAs got for recommending the transfers that meant that there was a less than even chance of beating the company scheme. The transfer values offered by the schemes did not take into account those huge commissions, why should they. By transferring, those affected by the IFA mis-selling lost their guaranteed pension and were subject to the vagaries of the stock market, in a bet that because of the huge commissions they were odds on to lose.

There were also lots of cases where commission based IFAs advised people to take out personal pensions when a generous company scheme was available. The commission based IFAs in those cases didn't make any attempt to check whether their clients were eligible to join final salary schemes with generous company contributions. Advising them to take out a personal pension paid them commission, doing a proper job and identifying their company pension scheme and advising them to join it would have lost them huge commissions.

Commission based IFAs advised people to take out endowment mortages because it paid them huge commission. Advising the client to take out a repayment mortgage paid them none. It wasn't a balanced discussion on the relative merits of repayment and endowment, they simply told people that the endowment was bound to do better than the repayment mortgage.

Things are no different now then they were 10 years ago and it is pretty obvious why not. Just last week we heard of the fine for the recent IFA mis-selling of investment bonds.

If some products like savings pay no commission and unit funds and investment bonds pay commission then it doesn't take a genius to realise that the commission based IFA is going to look to sell the commission paying product regardless of whether it is the most appropriate product. What may have changed is that commission based IFAs have got better at justifying the commission based products they sell and covering their tracks so it is harder to prove what has gone wrong.

To pretend that the pension mis-selling and endowment mis-selling scandals were minor in relation to IFAs is frankly ridiculous. The losses redressed amounted to billions.

SnowMan

darkpool wrote: »

You must be paid by an IFA organisation to post on this website?

I must admit that has crossed my mind too. Perhaps in the interests of openness dunston could confirm he isn't been paid in this way?

Ark_Welder

SnowMan wrote: »

I must admit that has crossed my mind too. Perhaps in the interests of openness dunston could confirm he isn't been paid in this way?

Why should anyone be answerable to stories that have been invented and posted on here?

Meeper

When are you guys going to realise that we are no longer in the 1980's and the advice process has moved on leaps and bounds since then? This rhetoric and attacks on all IFA's as commission-grabbing salesmen is getting somewhat tiresome.