A ban on introducers is the way forward

Yes, I have finally snapped on the subject of introducers.

There is nothing else for it: they must be banned.

From a consumer point of view it is baffling how someone who walks and talks like an adviser, can really be no such thing.

I have been mulling over this issue for a couple of years now, watching as the caseloads of complaints found their way to me from readers. 

Letter after letter showed how savers were convinced to move their money into self-invested personal pensions or unregulated investments from much safer assets, such as final salary pensions.

Then you had those who were lured in by returns on products that sounded just like fixed-rate savings products, but were in reality high-risk mini-bonds.

And you had investors who believed they were taking regulated financial advice, but of course were not.

In example after example, the savers were initially approached by a person they describe as a financial adviser. Only they were not, they were an introducer. 

They are not allowed to present themselves this way, and the introducers, when approached, swear blind that they never said this “specifically”. But you know how this works as well as I do.

From a consumer point of view it is baffling how someone who walks and talks like an adviser can really be no such thing. Advisers are to blame here too, particularly at the less scrupulous end of the market.

They have approved box-ticking advice – essentially just signing off on product recommendations (which were never really given) or checks on insistent clients convinced they want a certain financial product or product transfer based on the information of someone who stands to get 20 per cent commission from their role.

When they do get complaints they shut up shop, and phoenix with a new company. 

Some of the directors even jump ship to start claims management businesses.

It stinks. Of course, the deep irony is that while the Financial Services Compensation Scheme acts as a vital layer of consumer protection, its very existence makes all this possible.

I hear the contrary arguments, that introducers are a vital cog in finding new business. I understand, at least when it comes to receiving a list of names and emails from a lead generator.

And it is all fine if the introducer is simply passing on someone for full financial advice.

But what is happening is something different, something more sinister, an unregulated world of product recommendations and guidance that always ends with the consumer losing.

So, what is the answer?

A ban on introducers must be the only way forward.

Then there must be stiffer tests on directors who fold one company with mis-selling complaints, perhaps with a ban on being regulated again or a director of a company for a set period of time.

This is the only way to clean up the mis-selling mess.

Trusting insurers

Here is a little tale for you about the insurance industry.

A few weeks ago, Admiral made its very decent pledge to give some money back to customers as we were all driving less.

Word on the street was that all the other companies were quite annoyed by Admiral.

As diligent journalists, I had one of my staff call the other major insurers to see what they were doing.

One by one they sent back long emails spouting hollow words about how much they were trying to help customers at this difficult time, and that of course they would give refunds to customers who notified them of a change of circumstances.

So we printed this.

And of course, readers rang their insurers and what do you think they were told? No, of course they could not have a refund.

This is exactly the type of obfuscation, sleight of hand and disingenuous language that is eroding all trust in insurers.

Mainstream insurance is a valuable product, but increasingly consumers think it is worthless, because of behaviour like this.

Better to have been honest from the outset, rather than to undermine the credibility even further.

Spotting a good thing

It is starting to seem increasingly likely that a number of landlords took advantage of the mortgage holiday scheme who may not have needed to.

The idea was that they could skip payments because tenants were no longer bringing in rent.

And yet, anecdotally, some buy-to-let investors have used the waiver to set a bit of capital to one side for future purchases and to do upkeep, which is not strictly what the scheme was for.

Don’t you just love landlords?

James Coney is money editor of The Times and The Sunday Times