More transparency needed to break the cycle of bank misselling says Panel
13 February 2013
The Financial Services Consumer Panel has welcomed the publication of the FSA’s mystery shopping exercise into the quality of lump sum investment advice given to retail clients. Carried out between March and September 2012, the exercise revealed one in four customers was given poor advice, with as many as one in ten being given unsuitable advice(1).
Clearly, bank misselling is continuing despite previous thematic reviews in the investment advice space which have found similar problems. The Panel therefore believes that stronger action is necessary to force firms to treat their customers fairly. This should include naming the offending institutions and tougher sanctions for breaches of the regulations
Adam Phillips, Consumer Panel Chair commented:
“We would have expected much better results given the FSA’s recent focus on investment advice. These findings are very disappointing. They do however highlight the importance of mystery shopping. Consumers should be entitled to expect more from financial institutions.
We are keen to see the FSA identify the institutions giving particularly bad advice, not least because the name of one appears to be already in the public domain. The anonymity of these institutions means that consumers are kept in the dark. People should be aware of wrongful behaviour and given the opportunity to take their business elsewhere.”
Notes to editors
- 11% of mystery shops found advisers gave unsuitable advice.
- A further 15% of mystery shops suggested insufficient evidence was gathered to ensure the advice was suitable for the customer.
- Biographical details for Adam Phillips and photographs in a range of resolutions are available on our website: http://www.fs-cp.org.uk/about_us/adam_phillips.shtml
- The Consumer Panel is a statutory body under the Financial Services Act 2012 and Financial Services and Markets Act 2000. It was initially established by the Financial Services Authority in December 1998. The Panel advises the FSA on the interests and concerns of consumers and reports on the FSA's performance in meeting its objectives.
- The Panel’s membership is drawn from a broad range of backgrounds with expertise including market research, law, financial services industry, financial inclusion, European Regulation, financial regulation, consumer advice, campaigning, communications, compliance and later-life issues.
- The emphasis of the Panel's work is on activities that are regulated by the FSA, although it may also look at the impact on consumers of activities outside but related to the FSA's remit. More information about the Panel's work is available on our website.
- Panel members are appointed to serve a maximum of two terms of three years.