Four in five advisers expect the size and value of fines facing financial services companies for poor management of their information to increase over the next five years, a survey has revealed.
New research from outsourced information provider EDM Group revealed 28 per cent of 240 IFA respondents are ‘concerned’ or ‘very concerned’ about the ability of financial services companies to manage and store the information they receive.
Some 31 per cent claim they avoid recommending certain financial services companies to clients because of this.
Alarmingly, the research revealed IFAs believe the ability of financial services companies to manage their information is going to deteriorate.
Indeed, 22 per cent expect to see a significant increase in the number and size of fines inflicted on the sector over the next five years because of this, with a further 59 per cent expecting a slight increase here. Only 3.6 per cent anticipate a fall.
Around 51 per cent also expect to see an increase in the number of financial services companies they avoid because of their poor information management systems.
In terms of which part of the financial services sector are the worst at managing and storing their information, 49.1 per cent of IFAs named the banking sector.
This was followed by the mortgage industry (18.3 per cent), general insurance (14.2 per cent), pensions/life assurance (11.9 per cent) and investments (6.4 per cent).
Sam Ferguson, chief executive of EDM Group, labelled its findings as “alarming”.
He said: “Competition in the financial services sector is increasing and their customers are becoming more demanding in terms of the services and products they want. In meeting this challenge, financial services companies have to cope with a huge increase in the volume of information they receive, and how they receive it.
“Banks, asset managers and insurers need to become much more efficient in how they manage their information, but our survey suggests that in trying many will fail and increasingly break regulatory guidelines.”
