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  • Stuart Fowler

Banks named and shamed


High Street banks dominate the first list of firms named and shamed by the Financial Ombudsman Service. In the categories of Investments and Life and Pensions (including pension ‘decumulation’), the five biggest offenders each have over 150 new cases in the first six months of 2009. On average, 43% of their Investment cases were resolved in favour of the consumer, 34% for their Life & Pensions cases. Details can be found on the FOS website.

Bank of Scotland (744), Barclays (472), Lloyds TSB (293) , HSBC (167), and Alliance & Leicester (150) are the five biggest offenders. Large banks are bound to dominate just because of their size but if you sort the table provided by the FOS you will find that the rulings against them are also typically above 30% of cases dealt with.

Because of the dreadful delays in dealing with the backlog of cases, the resolution rates and the new case incidents do not match up. As the impact of weak stock markets is felt on complaints, the investment case volumes are likely to rise further and the successful resolution rates soar. Previous posts have explained how banks have systematically mis-sold risky investment products in place of low-earning deposits, including a case we have taken to the FOS.

A linked theme is the FSA’s attempts to raise personal skills, through new Diploma-level entry exams for the 70,000 or more advisers working with the public. But it isn’t directors and sales managers who will be spending the 300 hours or so to qualify themselves as advisers. Individual skill levels will not alone help and will merely exacerbate the immorality of the selling pressures placed upon them, if not accompanied by a radically altered board room culture in retail banks.

IFAs don’t feature in the FOS list but this is partly because it is limited to firms with over 30 cases. The independent sector is too fragmented to make this cut. But to the extent they have offended, they will be within the 10% of cases not covered by this list. Other data from the FOS has made it clear that independent advice has attracted proportionately fewer complaints than bank advice.

Ranking by the highest proportion of total cases resolved in favour of consumers, credit and general insurance dominate. But amongst them is one investment firm, St James’s Place Wealth Management, at 59%. Wow! As we have said before, this is one of the least understood entities in the marketplace.

With facts like these, you hardly need No Monkey Business to argue the absurdity of the footfall in retail investment services. Not enough trust? Too much, more like.

#commissions #misselling #regulation #risk

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