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Wheatley: mis-selling banks can learn from advisers’ client focus

by Daniel Grote on Nov 14, 2012 at 07:57

Wheatley: mis-selling banks can learn from advisers’ client focus

Financial Services Authority (FSA) managing director Martin Wheatley has argued that the financial services sector can look to the example of advisers in reversing a ‘change of culture’ that has ignored the value of client relationships.

Wheatley (pictured), chief executive designate of FSA successor the Financial Conduct Authority (FCA), acknowledged that the mis-selling scandals the regulator has been forced to deal with have originated primarily from the banking sector.

‘We’ve seen a change in culture in much of the financial markets, where the client has ceased to become a valued consumer for the long term and has become a profit commodity for the short term,’ he said, speaking at the Association of Independent Financial Advisers’ gala dinner.

He said that delivering a ‘new level of trust’ represented the greatest challenge for financial services, and said that areas of the market which needed to repair client relationships could look to the example of advisers.

‘The great strength of your sector is that by and large you have not lost that [relationship with the client]. You understand your clients, you are close to your clients, and you know you can’t treat them as profit centres,’ he said.

‘Unfortunately that hasn’t been the case for every part of the industry and I hope much of the rest of the industry can learn the importance of putting the consumer at the heart of its business, in the way that your industry has traditionally done.’

Wheatley also acknowledged the threat the retail distribution review (RDR) posed to mass market advice.

‘The challenges are that this is a new business model, [and there is] an area of significant uncertainty about how the suppliers of services and the consumers of those services will respond to the changes,’ he said.   

‘There is certainly a sense that some of the larger providers, particularly the banks, have decided they are not able to provide advice at particular areas of the market.’

But he added that the RDR would lead to a greater clarity of the service delivered by advisers to clients, and would better align the interests of both. He said advisers had embraced the RDR qualification requirements, and that the latest figures showed over 80% had now achieved the level four standard.

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16 comments so far. Why not have your say?

Jonathan Kirby

Nov 14, 2012 at 09:29

That all sounds very encouraging.

At least it seems that they now realise what the banks have done to destroy faith in financial services and that the actions of his own organisation will lead to millions of people being left to their own devices.

Is it just a speech though designed to go down well with IFAs or is it going to be a genuine change in policy where the IFA is valued?

Time alone will tell.

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Julian Stevens

Nov 14, 2012 at 09:35

Cautiously encouraging. But please, Mr Wheatley, try to avoid any more unnecessarily adversarial statements such as the one about shooting first and asking questions later.

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Nov 14, 2012 at 09:37

‘In contrast to a FSA approach that I can characterise as regulation through the rear view mirror".

Weird - I'd only expect to hear this from an IFA..........

Another day dawns......perhaps?

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Nov 14, 2012 at 09:59

Refreshing change, a welcome change, work with us and you will find advisers very helpful and supportive.

We want to see the end to this nightmare we have all been working through for the last 20 years.

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david cubitt

Nov 14, 2012 at 10:05

this is great news and very encouraging. At long last we are getting down to basics and understanding what most of the true professionals in this sector already know.

sorry to keep beating the drum but what Wheatley has said is at the heart of what Succession is all about.

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Lyndon Edwards

Nov 14, 2012 at 10:25

You can lead a horse to water but you cannot make it drink.

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Ian Lees

Nov 14, 2012 at 10:28

It is so great to see Martin Wheatley who demonstrates the insolvent reckless banks " can learn form IFA's whose businesses - have been destroyed by the failures of the FSA and their owners successive governments. The losses of so many advisers over teh last years - the destruction of good advice and the millions of peopel excluded form onbtaining advice - unless it is unnecessarily expensive - a result of the failures of successive governments - and Fimbra PIA FSA and now the FSA has contruted to the destruction of advice Independent and tied. The banks continue to sned untrained employees - to gather information form theri customers - feigning they are no longer giving advice. Yet RBS and LloydsTSB are constantly churning their custoemrs policies - for their inhouse commssions. LloydsTSB Group - alert theri local managers when a cusotmer cancels a Scottish Widows insurance Bond. The LloydsTSB rep then contacts the client to " arrange a meetingwith the TSB adviser and provide advice on how to invest". I consider this to be insider dealing - at best.

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Nov 14, 2012 at 10:29

Mr Wheatley seems to be on the right track. Shooting first, then asking questions is also a proper response. For so long the current system has failed both the public and the advisory community. By taking years to take any actions over miscreants, the FSA has aided and abbetted the guilty, whilst costing us dearly both in terms of reputation and fees.

Lets hope Mr Wheatley encourages a greater co-operation with the SFA as well, with the sole aim to get some of the con men and those guilty of serious breaches of trust, in jail.

The USA looks from the outside to have a regulatory authority that is very light touch, but all know that jail awaits for those who break the rules. This works to a certain extent, however we must also act to tighten up the international crime systems that hide between different legal juristrictions.

Hell hath no fury like the US citizen who has lost money or denied profit by someone, wherever they live, however they have little interest in US citizens who rip off someone overseas. The boiler room scams continue, but if they were marketed within the US, the FBI would be on to them in a shot.

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alastair lyon

Nov 14, 2012 at 10:53

"IFA's have embraced the qualification requierements" Well ???? some have and some haven`t - it is something that we have all had to do, and the fact that most of us have now done it is a far cry from saying that we have "embraced that particular RDR demand

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Jonathan Kirby

Nov 14, 2012 at 11:00

@Alastair Lyon

Totally agreed. Coerced would be the word I would use!

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Ian Lees

Nov 14, 2012 at 11:55

What possible reaosn would banks have for " learning any lessons from client focussed IFA's ( or tied advisers ? " Banks are " a business ", banks are in the business of lending money - high street money lenders or back street sharks ! they have demonstrated this over the decades of ripping off their cusotmers - used endowments to swindle borrowers into purchasing high charged endowments - for hefty commissions and reckless selling practices - beofre moving on to sellPensions and PPI . Given theri large client banks - and the requireent of their customers to purchase a product every six years or more - they are well placed to attack their clients - selling products to them in the most tardy selling strategies - for the banks profiteering )( and in some cases racketeering ) . Why would any cusotmer trust any bank given theri background. Changing a senior director or employee such as ordinary fred at RBS, o Eric Daniels at LloydsTSB or John Varley or Robert ( uncut ) Diamond at Barclays - does not solve the problems - but only serves to brush the problems under the carpet. It certainly does not stop the profiteering by bankers. Treating cusotmers fairly ? mon derierre ?

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Philip Wise

Nov 14, 2012 at 12:10

This is very encouraging, and lets hope he can see it through.

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Green Eyed Monster

Nov 14, 2012 at 12:48

Martin Wheatley's comments are the most positive we have had from a regulator for many a year. He obviously does not see the banks as his cronies- to be protected at all costs - and appears to acknowledge that IFAs are on the clients' side, and should be encouraged in their endeavours.

But words are cheap, and his audience was adviser representatives. Would he make the same speach to bankers, insurers, Government, Treasury etc.?

Lets give him a change to prove his mettle.

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sol trader

Nov 14, 2012 at 13:13

Just think, if we ever reach this Utopian goal of sensitive, tcf, kyc, banks and large distributor providers, IFAs will no longer exist, nor will Journalists or Regulators. I remain fairly confident we will all find a role post rdr. In fact, having recently been in competition with an online portal for enhanced annuity quotes - it seems they automatically assume clients suffer from everything (sort of KYC would make Auto Enrolment proud) - I suspect much post rdr "scandal" will revolve around mis-"buying" rather than mis-selling.

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Julian Stevens

Nov 14, 2012 at 13:46

The FSA's approach with its RDR has been either to get us all to work according to its Utopian ideal or kill us in the process (no prejudicial agenda, though, or so Hector Sants would have us believe). Many already have fallen by the wayside, unable to cope with any more:-

1. hindsight reviews,

2. spiralling levies (FSA budget this year up 16% plus the MAS plus supplementary FSCS levies),

3. higher and higher premiums for ever less reliable PII cover,

4. the relentlessly escalating burden of red tape (e.g. 30 pages or more just to document the sale of an ISA) and

5. the likelihood that, come Red Button Day, our services (unless we provide them at a loss) will have become priced out of reach of all but a limited number of at least reasonably affluent clients.

Martin Wheatley seems to be a bit more pragmatic in terms of what is likely to be practically achieveable and perhaps (we hope) recognises that the FSA has been allowed to get completely carried away, trampling rougshod over anyone or any body that dares to try to stand in its way.

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Ian Lees

Nov 14, 2012 at 14:30

Now that so many IFA's clients have been dumped as a result of RDR - they will expect greatly enhanced service - from who ever - if they decide to buy any product or service. Why would anyone purchase any product or service form Scottish Widows direct or Standard Life direct or Fidelity Funds direct - without any reasonable level of service ? Consumers have been abandoned by the FSA and their government - and the poor offering form the money advice service - or theo patheticus on auto enrolment - will demonstrate this. With sainsbury's low turnover of employees - despite the low wages - it is unlikely advisers kicked out or ejected - will be able to get jobs even as shelf stackers

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