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Barclays financial planning arm to close

by Alex Steger on Jan 26, 2011 at 10:15

Barclays is planning to stop offering financial advice through its retail branches by closing Barclays Financial Planning after a review deemed it no longer commercially viable.

Barclays said it expected to offer retail investment advice online, and that it expected financial advice in bank branches to decline.

‘Barclays has been conducting a detailed review of its financial planning advice over recent months. This review has concluded that, given the changes to the retail investment marketplace, it is unlikely that this business would be able to deliver a return that would justify the investment required,' said a spokeswoman.

If the proposals go ahead around 1000 staff will be affected. Barclays said it could not comment on job losses and would work with the union Unite to redeploy the staff in other areas.

Barclays said it will shift its focus to online execution only service Investor Zone and that existing plans and investments currently held by customers will continue to be serviced.

The bank was recently fined £7.7 million by the Financial Services Authority for mis-selling two Aviva funds.

97 comments so far. Why not have your say?

Giles Pidcock

Jan 26, 2011 at 10:24

good!

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Sean Kelly

Jan 26, 2011 at 10:26

This shows that banks believe that full financial planning will be dead post RDR and they are gearing up to 'sell' products to the unsuspecting public.

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Simon

Jan 26, 2011 at 10:27

What a ridiculous comment - cannot be 'good' to make a further 1000 people unemployed!!

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Julian Sunley

Jan 26, 2011 at 10:29

Although sad for the individuals who will lose jobs, from an organisational point of view I can't help thinking 'one down, hurrah!'. I hope all affected find new positions with good firms who do not have a history of mis-selling complaints.

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David D

Jan 26, 2011 at 10:31

I suspect this is a decision made based on the RDR changes and the realisation that the cost of advice from a liability and salesforce point of view is not worth the reward.

I don't think its necessarily all the RDR changes that we know about but the almost daily updates of new things which seem to want to increase consumer protection and reduce remuneration. In post RDR world, fines in the millions and redress in the tens of millions will not be affordable.

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Mike Clarke

Jan 26, 2011 at 10:33

Disapointing for those concerned and the low net worth clients that will not get advice or be able to pay fees.

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newgenIFA

Jan 26, 2011 at 10:34

as an ex-employee from years ago, this news doesn't surprise me - hard work under a sales management system for v little return, it was BARCLAYS life rather than mine!

If the branch were motivated and you received good leads, the potential was there -providing the clients didn't want independent advice. Invariably, the higher net worth ones did..

Let them stick to what they're good at - banking.

Another prompt for those who require advice (and have money) to see an IFA!

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John Hooper

Jan 26, 2011 at 10:34

This is the reality of our current UK economy. RDR will pale into insignificance compared with the REAL issues facing the economy.

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Darren Lloyd Thomas

Jan 26, 2011 at 10:38

Horaayyyyyyyyyyyyyyyyyyyyyyyyy!!!!!

Sense prevails! I am now moving all my accounts to Barclays - they can try and flog me pet insurance all day long - just great to see one bank finally seeing that flogging nasty investment products to Granny's is wrong. Will the others now follow suit? Please Lord let it be so!

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CJSTEWART

Jan 26, 2011 at 10:39

I agree with Mike Clarke - this is not good news. The majority who need advice but can't afford to pay for it are being squeezed further.

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George Migeod

Jan 26, 2011 at 10:40

Barclays and the other main banks always fudged their tied status to their unsuspecting too trustworthy retail clients and now the chickens have come home to roost- at last ! The huge fines from our beloved FSA have not helped their cause one bit.

Hopefully other banks will now follow suit and close down their pushy ill advised sales arms.

The Fundamentally Supine Authority can continue to fine the remaining banks to oblivion for their mis selling deeds.

Opportunity knocks here for IFA's to cherry pick the remnants of their customer base.

Carpe Diem!

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Mike Kindler

Jan 26, 2011 at 10:41

What price Mr Sants' assertion that 10-20% of advisers will leave the industry? If 10 -20% of the banks were to think the game is not worth the candle where does this leave the FSA role in promoting consumer outcomes?

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LesRythmes

Jan 26, 2011 at 10:41

Barclays is gearing to be split. It wants to become a bulge bracket investment bank. This will happen whatever Vickers says in his review.

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Kevin Murphy

Jan 26, 2011 at 10:41

On the face of it, losing a competitor isn't bad news - or is it? If the banks don't see the ability to make a profit out of providing financial advice - shouldn't we all be starting to worry? Also, won't it just reduce the numbers left to foot the compensation bills?

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The Dark Horse

Jan 26, 2011 at 10:42

Although it is pleasing that an organisation which brands their customers as "conquests" is exiting stage left, it does strike me that with fewer big boys to pay the FSCS levy, our costs will keep soaring.

Edit : less salesmen flogging rubbish products might offset this effect, however.

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Alan Lazenby

Jan 26, 2011 at 10:43

Very sorry to hear about the job losses, this will be devastating news to all the people concerned. The quality staff will have no issues getting new employment but with so many going within the next six months there will be some that will just leave the industry to concentrate on what they were good at, selling.

Lets hope the senior management in other Banks look at this and improve service and advice standards, or face the same fate as Barclays.

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Robert Johnsey

Jan 26, 2011 at 10:45

I am sorry for the genuine people who worked in planning at Barclays - there must be some - but overjoyed that the bank is closing down its sales force which has caused great misery and distress to many people - I know - I have won cases against them via the ombudsman for mis-selling to elderly and vulnerable people. A victory for the common man.

This is nothing to do with the state of the economy and everything to do with the fact that salespeople were pushed to sell even when it was unsuitable and the consequent costs of liability were too much even for Barclays. The last great compliance push saw all the insurers close down their sales forces for the same reason - I hope that other banks follow this lead.

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matryx

Jan 26, 2011 at 10:45

Online execution only will only mean more mis-sold products, oh! with no comeback the public will pick up the cost, again..........

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Simon Booth

Jan 26, 2011 at 10:45

Well, there's a surprise. You would have to think that the other banks are also going to be thinking along the same lines.

After all, they can make the money they make from financial planning in a couple of corporate banking deals - with no PR risk to the business and no ongoing liability for an indeterminate period of time.

And to suggest that people will go and do it on an execution basis is fanciful - it simply means that they can say that they do financial planning when they don't

Well done RDR! Or rather the threat of RDR. What other unintended consequences will it have?

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Sam Caunt

Jan 26, 2011 at 10:47

This reflects the move to advice post RDR which is what the FSA want. Not products.

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Martin Bamford

Jan 26, 2011 at 10:47

But won't the RDR hand the banks a massive competitive advantage - I thought that was the line being peddled by the anti-RDR brigade?! :-)

The new higher standards being introduced as a result of the RDR will apply equally to banks and IFAs.

Perhaps this news from Barclays today will finally start to make this apparent to those advisers who, for whatever reason, choose to argue that the RDR will benefit the banks that this is not the case.

Of course it is a shame to hear about the inevitable job losses from this move. We would be (as I'm sure many other NMA firms would be) happy to speak to any Barclays Financial Planners based in Surrey who are qualified to Chartered Financial Planner and/or CFP level.

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Giles Pidcock

Jan 26, 2011 at 10:48

Dear Simon (post #3)

Oh, sorry, i was looking at this from the perspective of the bank's customers!

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Roger Puffett

Jan 26, 2011 at 10:50

Although now an IFA I first entered this industry via Barclays Financial Services and have very fond memories of the friendly support I received from the excellent branch staff.

The training I received was second to none and, together with exposure to a tight compliance regime and awarenes of the risk to the brand, the experience formed a sound basis for a long and profitable career.

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Paul Stocks

Jan 26, 2011 at 10:51

I'm confused as to the 'this will affect those who can't afford to pay for advice' comments.

The inference I take from such poitns is that there's an assumption here that Barclays provide the products and the advice for free?

I would propose that this isn't the case it's just that clients aren't aware of the cost of said advice.

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John Smyth

Jan 26, 2011 at 10:52

newgenIFA

"Let them stick to what they are good at - banking". !

You must be joking or you worked for them for too long.

Who believes that Barclays or any of the other major banks have proved to be good at banking ! All of their retail and small business services are shockingly poor and don't forget it is they who are mainly responsible for the financial mess this country and many others are in.

Don't come back and tell me that Barclays did not have to take taxpayers money. I know, but they almost did but then went running to the middle east instead and they profit greatly from government guarantees.

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David L Williams

Jan 26, 2011 at 10:58

Sorry John, but I am intrigued by your last remark re profiting from govt. guarantees. How do you mean?

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Darren Lloyd Thomas

Jan 26, 2011 at 11:00

Well said Paul Stocks. Martin - you are quick off the mark and good for you in offering oppotunity as an expanding business. However, I would genuinely worry about taking on a bank based adviser - just because of the culture change issues - regardless of qualifications. Think about it, the Barclays advisers who will now leave, are going to be the ones who happily had their heads in the trough whilst the going was good - and weren't motivated to change by their own consience. Yes - I can be this rude, because I was one of them in the late 90's. My sincere sympathy to those who now will be job hunting, but I would sincerely doubt that many will move to a professional role. Most will go and work in sales.

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ROBERT PERRY

Jan 26, 2011 at 11:00

Well done FSA!!! Is this the first sign of RDR providing a positive outcome for consumers? It would appear Barclays has thrown in the towel and will now be offering an online execution only service. Lets hope members of the public buying online understand what they are buying and what they actually need.

When will our Government get to grips with the FSA and ensure it is fit for purpose. It is destroyong a major industry and doing nothing to close the savings gap.

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John Smyth

Jan 26, 2011 at 11:01

Roger Puffet

If Barclays had such a tight compliance regime how come they have copped for the large fines and lose so many complaint cases ?

I was pleased to hear of your long and profitable career but unfortunately from the evidence most IFA firms see Barclay's and many other bank customers have not found their experiences to be so profitable.

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Brads

Jan 26, 2011 at 11:05

I suspect this has less to do with RDR and more to do with "return on capital employed", the same reason why many providers have exited and will exit the group market. Basically the whole indutry needs to focus having a profitable distribution process and that means everyone taking a very close look at what they do.

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David Irving

Jan 26, 2011 at 11:11

I'm really struggling to understand the comments from those who are saying that many people will be squeezed out because they need advice but couldn't afford to pay for it. Quite honestly, judging from the standard of advice that banks have been giving for the last 25 years, the masses are better off with no advice at all!

Its welcome. Banks have been out of step with the market for a long time. They still sell products, where the market has been moving rapidly towards providing advice. Because that model requires a lot of work, the short-term profits aren't there. Most IFAs have realised this a long time ago and their business models have shifted to take account. Banks can't do that. They need the profit now, to satisfy their shareholders and directors.

Although they will blame the RDR, it isn't the RDR that's done this, its a result of the population becoming more 'savvy' and IFAs offering a more desirable and professional service. There are still several operations that remain, but its a start

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Anitaki

Jan 26, 2011 at 11:11

These "soon to be redundant" SALES staff, for that is what they are, are in for a rude awakening if they attempt to become IFAs in the real world of real financial planning.

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Ian Wells

Jan 26, 2011 at 11:26

There is no rude awakening moving from a sales environment to an advisory one. Having made the transition myself 10 years ago, I can assure you it was pretty painless.

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gwilym rhys-jones

Jan 26, 2011 at 11:38

There is a God after all and who is merciful.

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Sandra Urquhart

Jan 26, 2011 at 11:41

Sad for the staff who will loose their jobs, but less competition for IFA's in the long run.

I wonder if this is the start of banks to stop offering "financial advice"?

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Ron Jones

Jan 26, 2011 at 11:41

So this means that a major contributor to the compensation scheme exits?

Other banks may follow?

If they did what would the remaining liabilities look like?

Maybe now the sudden interest in the RDR makes more sense?

Spot the greedy IFAs who think they will benefit from other's misfortune.

This means L&G loses a major source of business, could this mean the sale of L&G?

The ripples travel far and wide a few new clients may not compensate for this.

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Bob Donaldson

Jan 26, 2011 at 11:52

This is just the same old merry go round we have seen in the past. You put your left leg in left leg out etc. One minute they all own estate agents, next minute they are tied, next minute they are independent - you get the message. Whats betting that within five years they will be back with an independent arm again when they see how advisors can make money from it! Any takers 5 - 1 on!

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new model adviser

Jan 26, 2011 at 11:55

Hope the other banks don't follow suit as who will repalce all the ageing ifa's due to retire over the 5-10 yrs. Most new blood could not afford to pay for all the exams, find a company that will train them to be competent whilst surviving on commision only.

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Tim Page

Jan 26, 2011 at 11:56

Well it's been a real roller coaster of a week on the news front:

- FSCS interim levy - Boo!

- Very funny article on Mr ex-Cru: Horray!

- A completely potty DP from the FSA about product intervention and price capping: Boo!

- Barclays FP closes: Horray! No, hang on... Boo! Err wait a minute... can I sit on the fence?

This is both good and bad news.

Lots of hard-headed corporate types are making grown-up decisions based on the cold numbers about the UK advice market (Macquarie, Barclays, Aegon to follow)?

Maybe those of us with a more emotional attachment to the financial planning business / profession should have a serious think about why these corporations are getting out of the market now?

The FSA's bar will keep on being raised (a reference to that potty DP11/1 again).

For example, whilst they let it go in the RDR, the direction of travel on fees is to completely divorce them from product charges (that is, towards fee-only).

Whilst level 6 qualification may not arrive, higher level testing on more and more "high risk products" will.

Think long and hard about whether you have the financial, emotional and intellectual stamina to run this never-ending marathon (of which 31/1/12 is just a staging post), before rubbing your hands about a large competitor leaving the market.

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Julian Stevens

Jan 26, 2011 at 11:57

The fine slapped on Barclays came about primarily for shovelling risk averse clients into a fund that was completely unsuitable, a sin that they then compounded by fobbing off complaints by the thousand in the belief that the FSA would look the other way, as it has done for so many years. Well, okay, the FSA has finally done something and slapped a fine on Barclays.

Matching client risk tolerance to a particular fund or product isn't actually that difficult, provided you take reasonable care, you know what you're doing and you're prepared to accept that quite a few (bank) clients may well declare that what you're trying to get them interested in isn't for them.

The funny things is, though, that Barclays offer a range of pretty good structured products. Not very exciting returns, perhaps, but strongly underpinned which, one might have thought, would have been a rather safer sale than those two Aviva funds.

Still, Barclays product flogging arm is to be canned, so I suppose the world may be a slightly better place for that.

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Tom

Jan 26, 2011 at 12:03

@David L Williams

As The Cobden Centre (economic thinktank/charity) said:

"Barclays did not take a bailout from the tax payer, instead securing funds via the free market. Diamond acted audaciously in catching some of the dismembered limbs of Lehman’s that others were too scared to go for, and generally has been a pretty effective manager of his business. That’s it then.

Whoa, hold on. That is most certainly not it.

Barclays may not have taken direct tax payer investment, but it has supped (gorged, really) at the Bank of England’s special liquidity scheme. Without this pork geyser of state aid, Barclays would surely have gone to the wall. This was not some magical money of no consequence that was whistled up out of thin air, it was the taxpayer taking on the very worst risks that they had on their books, in return for freshly printed (electronic) cash, debasing the rest of us in the process.

Secondly, Barclays took a bet, not that bits of Lehman’s were being thrown away at rock bottom prices, but that governments would step in and bail out the banking industry as a whole, explicitly as well as implicitly, thus making those bits of Lehman’s worth something. Without the trillions of US taxpayer dollars thrown at Wall Street, those bits would surely be worthless.

Thirdly, the banking industry, Barclays included, have benefited from a hidden bailout. Quantitative easing: a process where the central bank buys assets directly from the banks (often the same bonds the banks bought from the treasury at a lower price some days before), to the engineered ‘positive yield curve’ where banks can buy longer terms assets earning high rates of interest, and then fund them at absurdly low rates at the funding windows of the central bank. The money-making opportunities given to the banks by the state, in the name of ‘balance sheet rebuilding’, are truly obscene.

Can any individual or small business benefit from interest rates at close to zero? Is any normal person able to borrow at those levels? No, of course not, we all know we’re paying many points over the base rate for our overdrafts, credit cards, mortgages and so on. Barclays and others are now raking in mountains from borrowing at close to zero and lending it out at 4, 5, 10 and 20%. And the market is rigged to allow this to happen. Are your hard-earned savings paying much? No, but Barclays takes your money, and uses it to fund its own smart trade ideas – the profits of which it, and Mr Diamond, get to keep."

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Dermot Brannigan

Jan 26, 2011 at 12:06

1000 people caused such consumer detriment that their employer was fined £7.7m, and I'm supposed to feel sorry for them?

However, I do feel sorry for them in one respect. Barclays couldn't be bothered to train them properly (hence the fine), and so they obviously consider it more cost-effective to ditch them, than train them up.

Says more about Barclays than RDR or the industry.

Martin beat me to the comment about anti-RDR people stating that it would drive consumers to the banks, but I echo his comments.

I suggest those 'ageing IFAs' grab one or two of these newly unemployed. They might be your saving grace

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John Smyth

Jan 26, 2011 at 12:08

Tom

Thanks a million for explaining to David L Williams the things I did not have the time to do.

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sol trader

Jan 26, 2011 at 12:14

this gives me 3 bad feelings and 1 good feeling.

Bad - Have Barclays thrown in the towel because they see a financial planning world where your profits can be (randomly?) fined out of you. I don't know the details of their recent massive fine but it strikes me as odd they are paying out compensation on long term investments after just a couple of years. It also seems a little odd that they should have "missold" an Aviva cautious risk fund with incorrect risk ratings - who is to say what is cautious and what is not? The reason cannot be financial as they would presumably have got the same commission from an Aviva "high risk" or "medium risk" fund.

Bad - As long as the banks are upsetting their clients, we IFAs have a competitive edge with our naturally more ethical approach.

Bad - for the unemployed - obviously

Good - If the regulator and the Treasury get the blame for this - perhaps they will finally be reigned in!

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Ron Jones

Jan 26, 2011 at 12:17

Re Julian usually agree with you, however I do not think the fine had anything to do with it.

The future in financial advice simply looks bleak.

If anyone needed this confirming......

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Ron Jones

Jan 26, 2011 at 12:18

Soltrader - agree

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Chris F

Jan 26, 2011 at 12:22

Sol Trader - the fines related to an obviously wrongly rated fund. It was flagged up to Barclays and they did nothing about it. It was deserved.

It is not unusual for special deals to be structured in order for one fund to be promoted. I am not suggesting this is what happend here, but from experience in the murky world of tied bank sales, it is also not unusual for "adviser" to be targetted to shift a certain amount of a particular fund or product.

None of this is good news. Consumers will not get looked after properly. There will be massive churning by the salespeople who simply move elsewhere.

Sure, some IFAs will pick up some pieces, but more often than not the consumer will lose.

The banks have done this before and they will do it again. The FSA will let them too.

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David L Williams

Jan 26, 2011 at 12:22

@ Tom & John

Thank you very much for the clarification. I must admit that, while I should have connected the dots on QE, the points about Lehman Bros and the special liquidity scheme had eluded me. It certainly explains the apparently inexplicable rise in commodity and financial asset prices.

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Anitaki

Jan 26, 2011 at 12:26

How St J P, Hargreaves Landown, etc must be laughing.

How M Weinberg & Co must be looking back with pleasure at the consequences of allowing untamed used car salesmen in to what had once been a semi-ethical, semi-professional industry. Well, instead of raising the barrier, they drove through it and the FSA apparatchiks have replaced it with a brick wall that seems to have another douple of courses added to it every day. The ex-car salesmen have long gone, (although a few remain "specialising" in mortgages), yet those of us who are still left trying to maintain this industry as a profession, get no help whatsoever, from the FSA who treat us all as car dealers who ought to be taken off the road and therefore constantly aim diktats at us which actually PREVENT us from spending more time with our clients.

We WANT to be professionals so stop treating us like naughty children who have morphed into bomb-site car dealers. To be honest, Mr FSA Apparatchik, our qualifications are often higher than yours, and we do not squander clients money as readily as you seem to be able to trough your way through public money.

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Michael Brown

Jan 26, 2011 at 13:21

So within 2 weeks we have two failures. Barclays and N&P. Caused because they could not make money and sold "unworthy" products.

What about the people, a disaster for them and no security for the future?

The other side we need to consider is that they probably had a training ground for financial advisers. A look at the blogs shows that many IFAs received their training at these organisations or home service companies. Where is that going to come from now? Will the product providers take over this role or who?

The bigger picture as the average age opf the IFA is what 52/3? RDR and other issues, how many will be left in the field to reap the benefits?

Could this be the tipping point where what the FSA want, advice and not sales will futher reduce the savings ability of the nation?

It would be very interesting to see how many Chartered or CFP advisers there are/were in Barclays as well?

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Christopher Petrie

Jan 26, 2011 at 13:34

This could be another big step forward for the IFA community. As a group, we still suffer from being lumped in with the bank salesmen, in the way we used to be tarred with the same brush as General Portfolio/Abbey Life/Allied Dunbar etc salesmen.

I have long thought that RDR will hurt the banks far more than the IFA community, and this may be the start of a process we saw 15 years ago when the tied sales forces all closed.

I'm sure the decent advisers at Barclays will soon find gainful employment at IFA firms.

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Kevin Smith

Jan 26, 2011 at 13:45

Don't worry about L&G they have many distribution channels.

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Richard Ross

Jan 26, 2011 at 14:28

There has to be a halfway house between bespoke advice at the higher end and pick-your-own at the bottom – and it is organisations such as Barclays that have the potential to profitably offer reasonable advice to the mass mid-market. They have the critical mass to generate economies of scale and the alternate product lines to maximise the overall client value. If businesses such as Barclays feel they cannot generate sufficient profits then it must surely be a wakeup call to all of us – particularly those operating in the mid-market.

I think it’s a worrying development.

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Simon Honey

Jan 26, 2011 at 14:36

Why do Banks need to offer financial advice when profit margins from overdrafts/loans etc are huge.

They are also charging many fees to their customers now, especially excess fees when a customer exceeds their limit, which they did not do so often in better times. This is because fees are pure profit and come with less risk of fines!!!

As for Barclays advisers, I remember that the FSA was worried about the compliance side back in 2002/3 when they threatened to take Barclays off the road unless they retrained the sales force.

So perhaps nothing has changed and now the FSA has quitely raised the same issue and Barclays do not want the hassle of retraining the sales force.

We should use this as a tool to encourage people to use IFA's by promoting our services to the local area that we work in.

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Christopher Bates

Jan 26, 2011 at 14:58

The basis of the Financial Planning Arm is not to provide huge profits in the scheme of the hundreds of millions to billions of actual profit but to just hold it's own a £20-50mil Profit from the 1000 staff would be about right..

£2,000 to 5,000 from each Adviser..

Why it is important is...

If you just have a Bank Account - 50% chance of moving to another Bank

Add a Credit Card - 40%

Add Savings - 30%

Add a Mortgage - 10%

Add a Financial Adviser Product - 1%

It helps to keep the wealthy clients Barclays Clients...

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Julian Stevens

Jan 26, 2011 at 15:00

To Simon Honey ~ Your point is well made. So what did the FSA do about enforcing its order on Barclays to retrain its sales staff to an acceptable standard? Apparently nothing. So what was the point of issuing such a directive and then failing to follow it up? It sounds like yet another FSA failure ~ will the list never end?

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An Observer

Jan 26, 2011 at 15:22

Some very prudent comments on here, however

You know what !!

Some comments astound me, does it not say something when most comments on here aims at damming the banks, i understand why, i really do, however were putting down recommendations to Prudential and AVIVA and such like !!! cant you see this sort of talk is ruining this industry, banks remain trusted by the public, rightly or wrongly. The more you lot keep bank bashing the more you dig our industry into a hole. There are lots of companies IFA, banks, builders, plumbers, electricians etc etc who can get by without trying to destroy the reputation of its industy. (wake up, nay sayers). there is good and bad in all.

If i have seen someone who i feel may not be well suited to their financial arrangements my first thought is to congratulate them for taking time to take advice in the first place, and i am grateful that this leads to potential business and referals.

THE BIGGER PICTURE, BARCLAYS IS NOW SPEARHEADING A MOVE FROM FACE TO FACE ADVICE TO ONLINE DIY ADVICE, IF IT SUCEEDS IN THIS , THE CARDS WILL FALL THROUGHOUT THE INDUSTRY.

Think about it, if negative comments convince the public that banks advice is all bad, and the products and advice is too, as some of you suggest, what do you think they will make of the rest of the people who opperate in this same market place ???????

Have a think before you speak.................... see the bigger picture......

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Simon Honey

Jan 26, 2011 at 15:29

Julian,

What they did was Barclays retrained its sales force, and encouraged some to leave.

FSA said ok Barclays you did what we asked we let it lie.

I know that not much has changed but now perhaps FSA have secretly put the pressure back on since Aviva issue.

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Christopher Petrie

Jan 26, 2011 at 15:32

@ An Observer...

Let me give you an observation. It's not these negative comments that have led to the public losing trust in the banks...it has been 20 years of bad behaviour from the banks that did it.

Each year, I take on several new clients who used to go through the bank for "advice", and have now realised they were being shafted.

Basically, Barclays has reaped what its sown.

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Tom

Jan 26, 2011 at 15:32

I joined Barclays in the immediate aftermath of the issue raised by the FSA, just after the sales force had been through the retrain (so yes, they did do it). I had to go through around six weeks training holed up in nice hotels. The best training I have received to be honest and just what any aspiring financial adviser could need. It was incredibly thorough and through intensive testing knew the sales process and products inside out (L&G only at the time). And the training continued in spurts for the next 18 months.

The lack of training isn't the issue at all- these guys will have had far more training, and probably better quality, than those who learned their trade in small to medium IFAs.

As we all know the sales culture is the problem- I left following an area meeting where we were told "success will depend on our bond mix". Once you'd covered off the ISA recommendation the next port of call would obviously be a bond (at huge commission). Very systematic, and I'd imagine the same with these Aviva contracts.

If all of the banks pull their sales forces as Barclays have this is going to leave a massive hole in adviser development that the majority of the IFA sector will not address.

And dare I say it, but it may also leave a massive whole in the amount of protection sold, where these guys do tend to sell (which is what you have to with protection) to those that might need it most.

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LesRythmes

Jan 26, 2011 at 15:37

I wonder if Tom Kalaris' bonus will be reduced.....

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Shaun F

Jan 26, 2011 at 15:40

It appears to me that they are pulling out as it is no longer commercially viable however should they decide to laucnh an online exectuion type service it will not aid anyone.

Let us never forget the banks and the assurers are here first and foremost for one reason only it is to make a profit.

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Paul Raseta

Jan 26, 2011 at 15:43

There are, I believe, several reasons for Barclays' decision:-

1. The Financial Planning Division hasn't made a profit (of any significance) for the last 5-7 years. This fact has been glossed over by successive 'Heads of Sales' who don't want to lose the great packages they are on, and are more than 'Level 4 qualified' in providing promises to their superiors of future successes, but know absolutely nothing about financial planning in any format. Bob Diamond (as tough as his name sake) has finally decided enough is enough.

2. I would realistically estimate that less than 10% of the entire sales force are currently Level 4 qualified (and probably the same proprtions in the remainder of the Bancassurers). A sizeable on cost to pay for 800 plus advisers over the next 10 months. Yes, I said 10 months, because Barclays consultants were told in November 2010 that they had until November 2011, - not December 2012 - to be qualified, or face the 'consequences'. (Well, at least that threat has been removed from them. With potentially 6 months gardening leave, it will allow adequate revision and study time to get qualified).

3. The two Aviva funds are just the tip of the iceberg, but the damage already done would have been accentuated when the next set of fines arrive, with, I would suspect, even greater compensation liabilities. Structured products would be next on the agenda - surprisingly the consultants were stopped from selling them in mid 2010, even though IFAs continue to have access to them. (Wonder why?) This is damage limitation for the bank, at the expense of their consultants and associated support staff.

As an ex-Barclays employee, I offer my sympathies to those being sacrificed. because the senior managers responsible for overseeing all the failings over the years, will still retain their jobs, albeit it in other, manufactured capacities.

Banks are great mimics of each other, so I for one, won't be surprised to see other banks making similar announcements over the coming months. They all adopt the same principles, of which you are all aware, and finally, the bird has come home to roost.

Not a time for rejoicing (unless you are totally vindictive), but time to reflect that finally, and ironically, the FSA has had its wish granted - that some customers at least, will be treated fairly.

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An Observer

Jan 26, 2011 at 15:50

@Christopher

I agree totally with you, my point is, what kind of advert do some comments make for financial services in the uk... banks operate the stack em high sell em cheep front which does nt make sense, but we kinda have to be grateful, it leaves us with lots of work.....

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LesRythmes

Jan 26, 2011 at 15:54

A lot of posters are referring to Barclays making a profit....er isn't this normal? The overriding objective of any company is to undertake business "with a view to making a profit". This has been enshrined in company law for centuries. Nothing wrong with this. The real point is how a company goes about making that profit. Focus on this.

I have no issue with Barclays, Goldmans et al making huge profits, provided they are made ethically and legally.

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Your Money Matters (YMM)

Jan 26, 2011 at 15:56

A few years ago Barclays ran a major advertising campaign spearheaded by a large Scottish gentleman also known as Hagrid. The punch line was that we are all 'Bank Managers' now! Perhaps the forthcoming online solution is the culmination of this cunning plan.

Perhaps a lateral thinking IFA might even stap up a smart wine bar/restaurant location as certain branch locations disappear.

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Richard Elms

Jan 26, 2011 at 16:55

An interesting raft of comments from many folk here.

I too am ex-Barclays having worked in part of what is now BarclaysWealth. I was made redundant quite a while ago and of the 16 folk around me who left at the same time there are just 3 I know of still in the industry.

I have to say the training I received, some of which I pushed for has stood me in good stead and allowed me to obtain good roles subsequently.

I am not surprised to see that they have quit, nor am I surprised at some of the comments above. I know that the bottom line from Barclays when looking at "investment planning" has been purely guided by profit for the bank since 1992. When I was there the emphasis was always on how much commission can we make this day/week/month. There was also a standing joke about BFP staff selling washing machines last week, financial services this week and used cars next week - sadly it was, at times, very true.

Yes, I feel sorry for those who will leave, I agree that the perpetrators of the whole mess will be promoted to other roles and also that the good ones (there are a few) will survive but very many will quit the industry.

Given some of the complaint files I saw this will not be mourned by many and will, in some households, be rejoiced. A new era dawns.....

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Chris O

Jan 26, 2011 at 18:02

I cannot believe some of the callous comments on this page, how can 1000 people losing their jobs be good????

Mis Selling is of course unacceptable, but is not exclusively caused by 'pushy tied bank sellers' The vast majority of tied advisors are honest and decent people who'd be mortified to see some of the comments on this page.

Sadly there are a significant minorityof IFA's, in my experience simply recommend the product/provider which gives them the highest commission or the one who takes them golfing once a month! I hear of some who are worse than ever who are cashing in before the fee based world cuts their earning drastically.

Of course there are dishonest tied bank advisors, but no more so than dishonest IFA's. You cannot take a moral high ground simply due to advisor status.

RDR will hopefully weed out the cowboys from the industry, who sit equally withing the IFA and Tied sector.

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Harry Katz

Jan 26, 2011 at 18:09

Not for nothing is the cockney slang epithet ‘Barclay’s banker’ a euphemism for something less polite!

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Robert Clark

Jan 26, 2011 at 18:17

As another ex-Barclays man, I am always saddend when I hear that jobs are being cut, but hopefully it will give these people the chance to experience life outside the strangle-hold of the Barclays sales machine. As others have commented, the training was excellent, the issue is how much of that the staff were allowed to use.

Looking at the 'mis-selling' (or should that be 'forced selling') from a slightly different perspective, aren't a few IFA business owners in danger of adopting the BFP sales model, by creating their own funds and insisting that their 'highly qualified' advisers use them? How is that any different to a BFP sales manager setting product targets for his/her team?

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David Bone

Jan 26, 2011 at 18:44

Richard Ross

I think that you hit the nail on the head re There has to be a halfway house between bespoke advice at the higher end and pick-your-own at the bottom – and it is organisations such as Barclays that have the potential to profitably offer reasonable advice to the mass mid-market. They have the critical mass to generate economies of scale and the alternate product lines to maximise the overall client value. If businesses such as Barclays feel they cannot generate sufficient profits then it must surely be a wakeup call to all of us – particularly those operating in the mid-market.

I think it’s a worrying development.

What frightens me most of all is that this is only the start the FSA are relentless it could eventually be that all financial services are completed online. The fact that some advisers are so ill informed and yet a lot very informed (well done and all credit to you) and for those to say hooray for the loss of 1,000 jobs and make ill informed remarks about Barclays does not demonstrate responsibility. yes Barclays does have lots of faults, and if they cannot be proftable there will be lots of others to follow and please do not believe everything that you read in the Daily Mail speak to your colleagues who are in the know.

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David Cowell

Jan 26, 2011 at 22:02

It strikes me that there are a great many negative thinkers out there.

What an opportunity to pick up new clients.

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Banged to Rights

Jan 27, 2011 at 08:19

@David Bone I agree with you, Barclays deciding that there is no money to be made under the existing model in the future is fair enough but to exit without trying the new model says a lot.

They would have done their research, internal and external, costings and as you say even with their resources and reach have concluded that the new model is not going to work and have opted for the pile it high sell it cheap model that will leave consumers less protected than now and possibly worse off long term as many will not buy at all.

This may be the start of other big players deciding on the same course of action.

If it is then the FSA will have notched up yet another major disaster that ranks along side the decimation of the home service companies and the subsequent loss of the culture of small scale saving and insurance.

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Ron Jones

Jan 27, 2011 at 08:52

Re David Cowell

I see no positivity in 1,000 jobs going in our industry, I would prefer to see a new slick slimmed down clean way of delivering advice to the consumer within their budget and tempering affordable cost with limited consumer protection, leading to an expanding industry.

I do not see on one hand opinion saying financial products are good for you similar to 5 a day fruit and veg, then people hailing a success of all of the fruit and veg producers and suppliers closing down as an indication of everything being ok.

This continual contraction is not healthy, I am stood on the same melting iceburg as the rest of the industry, last one picks up the bill for everything.

We gain £10k of extra business, then we receive a few thousand pounds worth of extra cost and a frightening amount of additional potential liability, the extent of which no-one really knows.

If all we did was pick up business each time a distributor left and no additional cost then I suppose, for us, it would be positive.

There is a cliff with the RDR and no-one knows the extent of the costs flying any which way if more than 25% of the industry leaves.

In Australia the government had to support the PI insurance for all doctors and surgeons because they had a similar situation and like the FSA didnt bother to address it until it was too late.

As far as I am aware they have managed to get one other PI insurer off the ground again after a few years of one government supported PI insurance, to attempt to introduce competition again.

Compensation nearly stopped all medical practise in a country.

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David Cowell

Jan 27, 2011 at 09:16

Q E D

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Ron Jones

Jan 27, 2011 at 09:24

Thank you David.

You did make me stop and think though, which other business would look at a major competitor leaving as anything other than positive?

Now that really is a worry.

Onlookers in other business must think we are mad.

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David Cowell

Jan 27, 2011 at 09:36

Best of luck, Ron. The glass really is half-full!

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Ian Neither Junior or Senior

Jan 27, 2011 at 09:47

For all those out there who think it's good, you need to think again!!!!

As an adviser recently returned to regulated sales, there are very few IFA's who are willing to take on and train even previously experienced people, let alone industry new entrants. If all the banks go this way then who will provide you with the new advisers you need to grow your business??? where did all the IFA's come from?? yes direct sales and banking.... As one of the ones affected by this, will any of you be prepared to take me on????

More than likely not, as you believe that i'd come in and then leave in 2 years and try to take your clients. As no one out there has any loyalty any more.....or do they??

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Richard Ross

Jan 27, 2011 at 09:47

Ron,

I'm sure they do think we're mad but I'm not quite sure where the madness lays - is it in mourning the loss of a competitor or in continuing headlong and lemming-like to the cliff edge even after someone with huge analytical resources has said 'look chaps, this really isn't going to be worth the candle any more'

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Alan Mellor

Jan 27, 2011 at 10:07

Ian, I believe it is the Individual that matters not their previous environment so I certainly would look at ex-Barclays people and (at the risk of sounding parasitic) have a client base that needs servicing in Wirral if anyone is interested give me a call.

Good luck to all those displaced.

Phillip Bates & Co Financial Services Ltd

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Kevin Murphy

Jan 27, 2011 at 11:02

There is a place in this industry for both Financial Advisers AND salesmen/women and not everybody wants the full holistic advisory service and the significant costs involved.

'Sales' is not a dirty word! We all have at times to 'sell' our ideas and recommendations to clients - but of course that's different because we know that we are giving honest advice which is in the client's best interest!

Therein lies the problem - it's whether or not the recommended plan/product is in the best interest of the client and whether the cost presents value for the service given that matters. There is nothing the regulators can do to prevent dishonesty - they can only deal with it after it is uncovered. As for value for money - there are increasing numbers of clients for whom it would not be possible to give a full service, profitably and at a price that still gave them a chance of making sufficient return to justify the level of risk taken.

There is obviously a good business opportunity still in dealing with the better-off clients or those who can afford significant regular savings/premiums but who will look after those further down the ladder - the ones who probably are most in need of good advice and to whom it usually needs to be sold? These are arguably the most important group for our industry because they are the future. They need to get into the habit of saving and investing and seeking professional advice in their early years

because they are likely to have to fund a longer retirement - unless they fancy working until they drop!

There needs to be a culture change - people need to reduce the level of credit that they have previously seen as acceptable and save more. I can't see that the regulator has taken, or proposes to take, any effective measures to help achieve this.

The ever-increasing cost of regulation (including training) is pushing the cost of advice ever higher and that is one of the biggest disincentives in my experience. Let's be honest, when the TER has the effect of reducing the projected return to the risk-taker by half or more, clients are going to start wondering whether the cost is worth the risk. even when the investments actually achieve the projected return!!

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Brad West

Jan 27, 2011 at 12:14

I work for Barclays having left a previous large building society. I left as they were offering poor products that were sold purely based on how many could be shifted. barclays has offered a fantactic investment and product range. The advisers I have worked with are a credit to the industry. I have always worked with enthusiasm and honesty irrespective of expectations to acheive targets, which are a part of every sales environment in the worl in all industries. I have always put clients needs first and still hit target. This is a worrying time for myself, my family and all my like minded colleagues.

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Lisa

Jan 27, 2011 at 16:33

I left Barclays Financial Planning last year due to the pressurised environment, I felt I was being pushed into delivering unrealistic targets set by greedy Senior Management on huge bonuses. I felt I was being driven into selling investments that may not be appropriate instead of doing what was best for the customer. I believe it is the sales targeted industry that is destroying the committed Financial Advisor. I have only ever wanted to do what was best for the customer and I decided that when I felt I could no longer do this I should get out.

Having said that the branch staff at Barclays on the whole are fantastic and they disagree with the hard sell tactics cascaded down from the greedy senior management. I feel bad for some of the great, harworking staff who got the bad news yesterday, as it certainly wont be the ones who are responsible for the mis selling who get the sack, most planners often only mis sold to keep their jobs.

It is the greedy senior management that need to be regulated and investigated by the FSA!

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Lisa

Jan 27, 2011 at 16:37

I perhaps worded the second paragraph badly, they may have 'only mis sold to keep their jobs', I should have said at times they may have felt pressurised to mis-sell to keep their jobs! Either way there is no excuse for mis selling but it happens.

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Jack Evan

Jan 29, 2011 at 17:48

As one of the 1000 staff that lost their job on Wednesday I find it difficult to understand why so many IFA's are gloating and see this as a good thing.

OUR industry is under huge threat, not just bancassurance but face to face financial planning in general.

I have worked on both sides of the fence and in the 2 years i have worked in bancassuarance have found many good, honest, hard working, FULLY QUALIFIED Financial Advisers that work with integrity and morals.

IFA's want to be careful what they wish for!

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peter dawes

Jan 30, 2011 at 13:36

I agree with you Jack as I worked as an Adviser for Barclays for 10 years and the last 4 years as an IFA, so I have been on both sides of the fence. My time at Barclays was a good one with many long term friends and client relationships that I still have today. I was very concerned to hear the news because if Barclays can't make it pay we all better watch out! The vast amount of advisers I worked with at Barclays were very good at their jobs and I would gladly work alongside them as IFA's.

Don't blame the advisers you need to look further up the line to see what has got them in this situation, those that can remember Barclays were in a very similar situation in the late 90's and took their sales force off the road to be retrained...I remember it very well it was called End to End, guess they just did not learn!

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Julian Stevens

Jan 31, 2011 at 11:26

I don't think Barclays can't (or couldn't) make retail financial services pay. What's more likely is that they couldn't make it pay as much as they want, at least not by doing it any way other than by flogging the latest high commission products by the boatload.

Most of them used to have IFA arms (remember?), but those were all quietly wound down in favour of Barclays Life, Black Horse Life, NatWest Life and all those bankassurance companies whose products had high charges, crap product terms, crap funds ~ but lots of commission. They too were wound down, because the products were so dismally uncompetitive.

Then they hit upon the idea of letting somebody else design, market and administer the products. All the banks had to do then was convince the provider/s that, through their branch networks, they could flog 'em by the ton and, on that basis, negotiate the highest commission deal. Such products probably don't carry much margin for the providers, but if you've got a third party pouring hundreds of thousands of pounds into them every week with no compliance liability on you, as the provider, then hell, why not?

Had it not been for Barclays monumental screw up selling something other than fixed term capital guaranteed bonds, the FSA might well have allowed this business model to continue indefinitely. Never mind that such products represent poor value and, for the most part, deliver returns barely better than a fixed term cash-based bond (funny how the FSA doesn't seem to have spotted that one). People believe they're doing something exciting by becoming "investors" for the first time and it's even a no-risk proposition into the bargain!

Very probably, all the other banks will now be cursing Barclays for having scotched the party by having made such a monumental balls-up of recommending off-piste products. They should have stuck to what the FSA was happy to let them get away with.

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David Bone

Jan 31, 2011 at 12:24

Julian Stevens

I would love to know where you dreamed up all of this information. If it makes you happy I will leave my comment as that.

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David Bone

Jan 31, 2011 at 12:24

Julian Stevens

I would love to know where you dreamed up all of this information. If it makes you happy I will leave my comment as that.

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Anitaki

Jan 31, 2011 at 12:38

l agree with Julian Stevens

l think his analysis of the situstion is "spot on"

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John Smyth

Jan 31, 2011 at 14:05

David Bone

I don't think Julian Stevens dreamed up any of the information you say he might have.

He simply made his observations based on the ways the banks have behaved over the years and I agree with him entirely.

He could have gone back even further and related how the banks first got into life assurance and general insurance when by compulsory purchase they bought the personal insurance agencies of their branch managers, many of whom were earning more than their salaries from them.

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John O'Deer

Feb 08, 2011 at 15:37

With the potential loss of so many advisers from Barclays over the coming months, I hope that Barclays do not regret this move as the traditional retail client seeks advice on their Life Assurance, their investment and retirement needs move to any other High Street Bank that will more than welcome them.

Is this a further death nail for the Bank Branch Networks. With limited hours, limited tills, no financial advisory service - is Mr Bob Diamond ultimately removing the foundations to his position and the reputational/service proposition that he is basking in?

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Julian Stevens

Feb 08, 2011 at 16:11

Almost certainly, Barclays' decision to knock their retail financial services arm on the head was based almost entirely on commercial greed. Given their resources, they could hire the best technicians, the best product researchers, the best compliance people, the best QA checkers, processing systems and even, Gadzooks, the best people to man a service centre. They could do it, and have most of these facilities centralised, like the IFA networks do.

But, when it came down to it, all these things that are essential to any quality, large-scale RFS operation were considered to be just too much of a drag on profits. So they've scrapped it which, I think, tells us all we need to know about the banks in general and Barclays in particular.

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Your Money Matters (YMM)

Feb 09, 2011 at 10:42

Research conducted on Barclays in recent years has shown that Barclays carefully constructed an array of strategic partners.

One of these partners was the previously known charity 'Help the Aged' which joined with Age Concern in April 2009 to become known as Age UK. The Health Secretary of the day was Labour MP Alan Johnson.

Another strategic partner being Aviva PLC. Aviva is a leading 'Equity Release provider' and fund management group.

Barclays were interested in the 'Grey Market' for commercial reasons. Help the Aged's research concluded that the 'Grey Market' equated to £240 billion per annum.

It is public knowledge that Barclays misold to the elderly, 12,331 of them!

What has to date not become public knowledge is how 'Barclays' have not complied with the Data Protection Act and used the 'corporate identity of one of its small business clients to enhance its image.

The Confederation of Small Business were spoken with in attempt to gain support.

The House of Commons advised to speak directly with local Conservative MP Dominic Raab. A follow up call is still awaited. If Mr Cameron's economic recovery is to gather pace then small business is seen as a focal point.

Barclays closure of its retail financial planning arm may have much to do profitability, but key to its future and the banks profitability maybe the allignment to 'Strategic Partners' going forward. As they say let the day unfold!

Your Money Matters

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Julian Stevens

Feb 09, 2011 at 12:34

To John O'Deer ~ it's death knell, not death nail.

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Justin Stockdale

Feb 09, 2011 at 22:11

Do you think that if Barclays was an american firm it would make these redundancies? It smells of Bob Diamond getting even after a grilling with the Treasury Select and being fined all that money....

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JM Keynes

Jun 14, 2012 at 12:51

Barclays have simply got the number crunchers in and concluded you can't earn a living after RDR.

Mr Sants and his crew of parasites have engineered an Extinction Level Event at the end of this year, and during the first 6 months of next year. There will be thousands of taxpaying advisers no longer in work.

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