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FSA: 25% of banks and building societies giving unsuitable advice
by Sarah Miloudi on Feb 13, 2013 at 09:17
Some of Britain's major banks and building societies are giving customers unsuitable advice, the Financial Services Authority (FSA) has said.
Following an investigation into the quality of information handed to clients, the FSA conducted a mystery shopping exercise in six major banks and found the advice in roughly a quarter was not up to scratch.
The regulator said it was keen to gain first-hand insight into the advice doled out by banks and building societies, and while in many cases it was not found lacking, in 11% of mystery shops it was unsuitable, representing roughly 25% of the banks assessed.
The FSA said the main reasons for advice being poor were linked to customers' risk profiles, their financial circumstances, needs and existing debt, and their time horizon for investments.
'This review shows customers are not consistently getting the quality of advice on their investments that they should expect when visiting an adviser in a bank or building society,' said Clive Adamson, the FSA's director of supervision.
The spot checks on bank and building society advice were conducted between March and September 2012.
More than 200 mystery shops were carried out as part of the investigation , and the publication of the results marks the first time the FSA has shared its findings on mystery shops widely.
The FSA said its use of mystery shopping as a supervisory tool is an example of the more intrusive approach that will be used by the Financial Conduct Authority (FCA) when it takes over as the consumers' champion following the dissolution of the FSA.
This commitment was made in its Journey to the FCA roadmap, published back in October.
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