The regulator’s 20-page report, titled Assessing the Quality of Investment Advice in the Retail Banking Sector, revealed that in 15 per cent of enquiries, evidence suggested that the adviser did not gather enough information to make sure their advice was suitable.
In a further 11 per cent of mystery shopping exercises, evidence suggested that advisers gave unsuitable advice.
Of the six banks subjected to mystery shopper enquiries, the FSA said one – reported in the FT to be Santander – was subject to an enforcement investigation.
Neither Santander nor the FSA would confirm if this were the case, however, a spokesman for Santander said: “We are considering the findings in the context of the significant actions we took in 2012 to prepare for the post-RDR world.
“We continue to believe it is important to offer customers access to a broad range of financial products that are suitable to their needs and individual situations, and we are working towards that objective.”
On the same day that the mystery shopper review was published (13 February), Santander announced plans to close its bancassurance division to new customers, with the roles of more than 800 advisers under review. A spokesman said “We are working closely with other business areas to ensure that many of those who may be impacted are able to secure roles in a growing Santander Group.”
True Potential Wealth Management said it would target displaced Santander advisers in a bid to attract them to the network.
| Key scenarios overlooked by bank advisers: |
• 15 per cent of enquiries resulted in advisers not taking account of attitudes to risk. • 6 per cent did not take into consideration the preferred length of a customer’s investment. • In 13 per cent of cases advisers failed to take into consideration a client’s financial circumstances – such as loans and repayment of unsecured debts. |
FSA comment
Clive Adamson, director of supervision at the FSA, said: “This review shows that customers are not consistently getting the quality of advice on their investments that they should expect when visiting an adviser in a bank or building society.
“Since this review took place, we have introduced new rules on investment advice that have increased the professional standards of the advisers operating in the market and have removed the potential for advisers to recommend products that pay the largest commission but may not be right for the customer.”
Industry comment
Gina Miller, founder of the True and Fair Campaign, said: “There is widespread support for regulatory action and our research reveals that more than 90 per cent of investors believe legislation is necessary to force transparency, with almost three quarters saying they want costs and fees disclosed as a single, cash figure.”
Adviser comment
Alan Lakey, partner at Hertfordshire-based Highclere Financial Services, said: “A lot of the issues noted by the FSA would have been picked up in a typical fact-find used by an IFA. Any decent adviser will offer better and more truthful advice compared with a bank.”
| Santander closes advice arm to new customers |
On the same day that the mystery shopper review was published (Wednesday 13 February), Santander announced it was set to close its bancassurance division to new customers, with the roles of more than 800 advisers under review. A spokesman said “We are working closely with other business areas to ensure that many of those who may be impacted are able to secure roles in a growing Santander Group.” True Potential Wealth Management said it would target displaced Santander advisers in a bid to attract them to the network. |
