New research by the FCA has found that 13% of UK adults who have received financial advice over the past year believe they have been missold an investment or pensions product. Unrelated to misselling, the same percentage say they have been given bad financial advice recently or in the past.
The FCA’s Financial lives survey 2017
questioned 13,000 people about their personal finances, Professional Adviser
’s Tom Ellis writes, but their thoughts on past perceptions of either misselling or bad advice were not looked at.
As a result, the FCA says: “Our findings will underestimate the proportion of all UK adults who perceive they have been missold a product or received bad advice.”
Consumers were also quizzed on their satisfaction levels with certain financial products. Defined contribution pensions are the least trusted product out of the 22 listed, and the second-least in terms of customer satisfaction. Life insurance, annuities and income drawdown come 17th, seventh and fourth respectively for trust, and 18th, fifth and fourth respectively for satisfaction.
Unsolicited approaches are also on the survey’s agenda: 18% of respondents have received a call, text or email offering advice pertaining to either retirement planning or a free pension review from someone claiming to be from the government.
Additionally, 8% said they had been asked by this third party for access to their pension. Phoenix, the group that owns Axa, Sunlife and Abbey Life, recently said a customer had called saying “a cold caller [visited] their home to get copies of their driving licence, national insurance numbers, bank statement and pension paperwork”.
Professional Adviser link
Ministry of Justice to look at rogue claim firms
The FCA’s conclusions align with statements made by Michelle Cracknell, CEO of The Pensions Advisory Service (TPAS), at FTAdviser
’s Unpackaging Pensions event, writes Maria Espadinha for FTAdviser
According to Espadinha, Cracknell said that claim management companies (CMCs) have been cross-selling the personal details of clients to pension scammers, and that TPAS has received calls detailing “a number of examples where this cross-selling situation is happening”.
The Ministry of Justice (MoJ), which regulates CMCs, will be looking into TPAS’ claims. Their head of claims management, Kevin Russel, said that they are unaware of any “CMCs acting illegally in relation to data handling and pension matters”.
FCA survey reveals that 13% of UK adults say they have been given bad financial advice recently or in the past
“We [will] continue to monitor the market and work with other agencies as necessary to inform our intelligence gathering and related work. Where regulated CMCs act in a way which breaches the current regulatory requirements, we deal with it and will investigate and sanction as appropriate.”
Cracknell said the MoJ’s involvement is “excellent”. Simon Evans, CEO of Alliance of Claims Companies, is quoted as saying that the issue “needs to be looked at and addressed”.
EU regulators assess costs and performance
While the MoJ looks at CMCs’ alleged cross-selling, the European Securities and Markets Authority (ESMA) said it will be working with two other European supervisory authorities, based on a mandate from the European Commission, on a large-scale study of the costs and performances of retail investment products.
Investment & Pensions Europe
’s Susanna Rust reports that the study’s aim is to “increase investors’ awareness of the net return of investment products, and the impact of fees and charges”. The costs and performance of Undertakings for Collective Investment in Transferable Securities (UCITS) funds will be the initial focus for ESMA.
The announcement was made at the opening of ESMA’s first conference by its chair Steven Maijoor. He is quoted as saying: “In that context [looking at the costs and performance of UCITS funds], we will also look into the differences between active and passive investing, and the impact on costs and charges, and long-term return.”
He said the right framework for the study is now in place with the upcoming implementation of the revised Markets in Financial Instruments Directive and regulation on EU packaged retail- and insurance-based products.
Increased awareness and transparency seems to be the theme coming from the FCA, the MoJ and ESMA. As the FCA looks at the attitude of consumers, the MoJ may take steps that alter these consumer attitudes. Similarly, the EU regulators’ study should benefit both adviser and client.
Investment & Pensions Europe link
Seen a blog, news story or discussion online that you think might interest CISI members? Email firstname.lastname@example.org.