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Hapless howlers: 10 top financial services gaffes

Following Scottish Life’s latest foot-in-mouth moment, we’ve dived back into the New Model Adviser® archives to pull out a few more of the biggest gaffes in financial services. Click through to see your favourite financial foul-ups.

A gift of a gaffe

It’s not been a great week for Scottish Life. Things started badly after Channel 4 broadcast its Dispatches documentary on annuities which led to the firm announcing a review of some annuity sales.

And the reviews are beginning to stack up, as Scottish Life has also announced plans to look into its compliance procedures after one of its sale staff badged pension switching as a ‘Christmas money making opportunity’ for advisers.

An email sent by a sales consultant for the provider to IFA contacts reads: ‘If you would like to make some extra money for Christmas then read on.

‘Do you have any existing clients that need a review of their current pension arrangement? If the answer is yes, then all I ask is that you send me the projections to retirement and the client’s attitude to risk.’

Scottish Life said: ‘We are treating this very seriously and reviewing our compliance procedures to ensure this sort of communication does not happen again.’

A gift of a gaffe

It’s not been a great week for Scottish Life. Things started badly after Channel 4 broadcast its Dispatches documentary on annuities which led to the firm announcing a review of some annuity sales.

And the reviews are beginning to stack up, as Scottish Life has also announced plans to look into its compliance procedures after one of its sale staff badged pension switching as a ‘Christmas money making opportunity’ for advisers.

An email sent by a sales consultant for the provider to IFA contacts reads: ‘If you would like to make some extra money for Christmas then read on.

‘Do you have any existing clients that need a review of their current pension arrangement? If the answer is yes, then all I ask is that you send me the projections to retirement and the client’s attitude to risk.’

Scottish Life said: ‘We are treating this very seriously and reviewing our compliance procedures to ensure this sort of communication does not happen again.’

The stray email

Aviva Investors accidentally sacks 1,300

A mass email blunder at Aviva Investors shocked more than 1,300 workers, who were accidentally told they had been sacked by the company.

The email, which was intended for one unfortunate employee, reminded workers of their contractual obligations and to retain any confidential information about the company and clients.

Staff were relieved minutes later when an email from Aviva’s human resources department apologised for the mistake.

Butter fingers

CII loses advisers’ exam papers

Advisers trying to get qualified in good time ahead of the retail distribution review (RDR) were left wondering if all their hard work had come to nothing when the Chartered Insurance Institute (CII) lost their exam papers.

The papers of 35 candidates went missing from a London sitting after they were passed to a courier service to be delivered to an examiner, in what the CII described as an ‘unprecedented’ loss.

The CII later recovered the papers.

Ham-fisted Hoban

MP likens IFAs to fast food workers

Financial secretary to the Treasury Mark Hoban lost no time in alienating the IFA community when, in October 2010, he compared the level four diploma to the qualifications held by a McDonalds shift worker.

Advisers hit out against Hoban (pictured) for his comments, but FSA director of conduct policy Sheila Nicoll backed him up.

U-turn

U Party fails to register for election

In a bid to boost pensions awareness, Robin Ellison, former chairman of the National Association of Pension Funds, and other pensions experts set up the U Party with the single manifesto issue of simplifying the pensions system.

But the party’s wings were clipped before it had a chance to fly after it failed to file the necessary application form to enter an election.

Its development director Ben Shaw went on to stand as a candidate in the 2010 election but, despite getting his paper work in order, he failed to secure a seat.

Mistaken identity

FSCS lawyers chase the wrong firm

Some advisers might argue that the Financial Services Compensation Scheme’s (FSCS) handling of the Keydata affair has been one big blunder, but it hit a particular low when its law firm Herbert Smith chased the wrong adviser for £40,000.

In a bid to recoup compensation paid out in relation to SLS-backed Keydata products, Herbert Smith wrote to more than 500 firms claiming varying sums but picked the wrong adviser when it contacted Isabel Sinclair (pictured) of Poole-based PFM Associates, demanding £41,449.

The demand was in relation to a former PFM adviser who had sold the product while at a previous firm, and the FSCS apologised for its mistake.

Not expert enough

MoneySavingExpert founder misinforms on live TV

MoneySavingsExpert founder Martin Lewis (pictured) showed that pensions were not his specialist subject, causing confusion over annuity rates and drawdown when he appeared on breakfast show Daybreak in 2011.

He mistakenly told presenter Adrian Chiles that if you have a pension fund, you have to buy an annuity but you couldn’t draw money out.

Lewis apologised for any confusion caused by his comments but defended himself and said he did not realise Chiles had asked about drawdown.

Power down

Cut cables take Skandia platform offline

The Skandia Investment Solutions platform sparked outrage when it broke down due to a power outage for an entire day in 2011 caused by workmen cutting through cables near Skandia HQ.

Skandia quickly put contingency systems into place so advisers could still trade while the platform was down and processed any changes that were faxed through.

It apologised for the inconvenience and the platform was up and running the next morning.

Archgate

Derks says Arch fund is ‘low risk’

Just months before the Arch Cru funds were suspended, former Arch chief investment officer Michael Derks was caught describing the private finance fund as ‘a bank deposit replacement’.

In a DVD discovered by New Model Adviser®, Derks (pictured) told former Cru boss Jon Maguire the fund was a low-risk strategy and was designed to be a cash replacement.

‘If you’ve got a very low risk as one on the scale and high risk is nine, it’s near one,’ Derks boldly claimed.

The fund lost an estimated 33.6% in the months following its suspension and Arch was recently hit with a £150 million legal claim for alleged gross negligence in its role as investment manager.

Error messages

Creevy lists his Aegon administration woes

Aegon must have thought it was finally out of the woods when it announced the completion of its £150 million consumer redress programme over pension administration failings, which began in May 2009.

But it was dealt a blow when Alistair Creevy (pictured), managing director of Glasgow-based Independent Advisers (Scotland), went public with his Aegon-based administration woes, which included receiving cancellation notices that were never requested and varying fund valuations ranging from £31,800 to £119,400 on a client’s group personal pension policy.

Aegon apologised for the mistakes, which it said was due to a system error affecting the client’s plan.

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