Is it just me or did anyone else think last night’s Panorama programme on BBC 1 uncovering banks’ failings at giving financial advice failed on one major point? Bank-based advisers don’t give advice. They sell.
Intermediaries and IFAs who are whole of market give advice. They look at a range of providers and help often vulnerable customers select the most appropriate product for their circumstances.
Trust is the key commodity for intermediaries who will lose customers if they fail to deliver good advice. Banks on the other hand have a ready flow of customers on current account tap. If one high street lender dupes you, you still need a current account and may simply switch to another.
The Panorama programme highlighted several cases where bank advisers had sold customers products they neither wanted nor understood – to that end it was a useful piece of journalism. It raised consumer awareness of mis-selling and showed the Financial Ombudsman can help you if you’ve lost out. (Though it didn’t go into the can of worms that is mis-selling claims firms’ fees.)
But it failed, dismally in my view, to show that crucially these so-called advisers were never going to have the customer’s best interests at heart because they were not advising.
Aside from their own wish to earn whacking commissions and their employer’s wish to turn a profit – selling is selling. It should not be allowed to be called advice. It isn’t advice.
If there is a failing here it is regulatory. Bank-based sales people should be labelled as such so Mr and Mrs Elderly-Vulnerable have at least some indication that the “adviser” they’re faced with has an agenda other than helping them.
The FSA’s approved persons regime is therefore half-baked. If it requires that bank-based advisers should be registered and pass CeMap level 3 qualifications to give advice, it should require them to give advice. That advice should be proper whole of market advice, in the interests of the consumer.
The European Directive on credit agreements relating to residential property does look as though it might be moving the regulatory regime further down that road by requiring all advisers to consider a suitably large range of products before recommending the most appropriate product.
Trade bodies and banks have argued up to now that a large high street lender has a suitably large enough range of products within its own brand – I’d argue that if Panorama achieved one thing, it was to show this isn’t the case.
As intermediaries you’re at a regulatory cross-roads – take the opportunity to get involved and fight for consumer rights to fair treatment by standing up for the value your advice offers. Post your thoughts below.
