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Financial Ombudsman Service Top Ten Business Groups Complaints List

28 Feb

Someitmes, as the adviser, you forget the quality of service offered in the “advice” world and so it is healthy to review the stats just to remind oneself.

I am a financial adviser (IFA) who has specialised in Investment & Tax Planning. I spend my working life trying to do the best for my clients. It is clear to me that each and every one who I advise, support and guide have placed their trust, wealth and financial well-being in my hands. I will always do my very best fopr them, wherever I can.

In comparison, the volume and type of complaints clearly identify that there are moany out there whos’ role is simply to sell whatever they can and without due care and consideration for the end user – there clients.

I think the figures speak for themselves.

The Financial Ombudsman Service deals with complaints about financial products, sales and associated issues. The majority of these complaints were upheld i.e. 93% against RBS, 87% against Lloyds TSB, 84% against Barclays Bank, 80% against HSBC, and 55% against Santander.

Payment Protection Insurance claims – 11% upheld against Capital One, 98% against Black Horse, 99% against Lloyds TSB, and 87% against HSBC.

 

Lloyds Banking Group Revamping its Financial Advice Arm

23 Feb

Lloyds Banking Group has announced it’s planning to revamp its direct financial advice arm. This is in relation to RDR .

What is the Retail Distribution Review (RDR) – this is a key part of the consumer protection strategy being introduced by the start of 2013. It is establishing a resilient and effective retail investment market, where consumers can have confidence in the advice and help they receive through financial advice on retirement and investment planning. 

In preparation for the RDR, Lloyds Banking Group is the latest bank to change its’ offering. They have stated they plan to split the offering between basic protection advice and a “financial planning” service. They have not confirmed if this will be provided by sales people or if they plan to offer an advice service (other than in name).

Lloyds currently operates an advice/sales team offering investment and protection products across its branch network, which includes Lloyds TSB, Halifax and Bank of Scotland.

 Lloyds refused to disclose details of the current size of its branch staff network dedicated to financial product sales but under the new structure the number of staff dedicated to this area of their business is expected to grow.

They have published, no decisions have yet been taken over how to charge customers for its financial planning service. Although, Ernst & Young suggested banks would have to charge clients at least £200 an hour just to cover costs after the RDR. (Assessment and report was in 2011.) Personally, assuming Ernst & Young’s figures are correct, this raises a concern how much will banks’ charge to offer financial services products to their customers.

A Lloyds spokesman says: “Customers require advice and support to understand and make decisions about their financial future and we are very well placed to take advantage….”

“As the IFA sector moves up market, there will be significant opportunities for bancassurers….through their high-street branch network.”

Last year Barclays closed its advice arm while HSBC cut 460 “financial planning managers” due to the RDR.

Payment Protection Insurance Mis-selling Claims Paid Over £2bn in 2011

22 Feb

 Be aware of the difference between financial product sales and financial advice.

The claims paid in 2011 for Payment Protection Insurance (PPI) mis-selling almost reached £2bn in December 2011 (figures provided by the Financial Services Authority (FSA)).

If you are a victim of this mis-selling, complain and ask for compensation; it is your legal right if you suffered at the hands of this horrendous treatment. Although, please do not take advantage of the system if you are not a victim of this crime. The concern being, there is growing support for the mentality to accuse, sue and/or exaggerate to make a financial gain, no matter that you didn’t suffer the crime. Please utilise your Rights but don’t abuse your Rights.

In this case there is no smoke without fire as the final cost of payments for actual mis-selling is expected to reach possibly over £8bn

 

Lloyds takes back £2m of bonuses paid to executives (Article in BBC Business News on 20.02.2012)

20 Feb
Lloyds Banking Group is taking back bonuses worth £2m from 10 executives, including the former chief executive Eric Daniels, the BBC has learned.

Four of those affected were board directors.

Mr Daniels is expected to lose between 40% and 50% of a £1.45m bonus, or between £600,000 and £700,000.

BBC business editor Robert Peston says they are being penalised over their role in the mis-selling of payment protection insurance (PPI).

This involved the sale of insurance that, in theory, covered repayments if borrowers were unable to continue repayments through illness or unemployment, but in many cases those taking out the policies would not have been eligible to claim on them.

Our business editor says three other board directors are expected to see about £250,000 of their bonus taken from them.

About six other executives, below board level, would lose around £100,000 each.

This is the first time a British bank has taken back bonuses from executives, following a financial performance that was worse than expected.

“The clawback of bonuses is important for its deterrent effect”

The return of some of the bonuses, which were demanded by regulators after the banking crisis of 2008, are being made after pressure from politicians and the Financial Services Authority.

Results

Lloyds Banking Group is the UK’s biggest lender and owns the Halifax, the Bank of Scotland and the Cheltenham and Gloucester.

It has been forced to set aside £3.2bn to cover compensation for those customers who were mis-sold PPI.

The bank will publish its results this Friday and is expected to announce a loss of about £3.5bn.

The bank has not yet formally announced its plans for the return of some of the bonus money.

Its current chief executive, Antonio Horta-Osorio, said in January he would not take an annual bonus for 2011.

Our business editor says the move may have a deterrent effect in future, making bankers more likely to consider the consequences when they launch new products or do assorted deals.

FSA Shuts Down Sale and Rent-Back Market – by Natalie Thomas

3 Feb

3 February 2012 10:43 am | By Natalie Thomas

 

The FSA has today published a report that shows most sale-and-rent-back transactions were either unaffordable or unsuitable and never should have been sold.

Following a review of all regulated rent-back firms, the FSA has referred one firm to its enforcement division while others have either stopped taking on new business or cancelled their permissions.

 

The FSA says effectively, this means the entire rent-back market is temporarily shut.

Of the 22 firms reviewed, only nine had been active since the FSA began regulating rent-back.

Of this nine, five firms have now stopped doing rent-back business, three have kept their regulatory permissions but decided not to use them for the foreseeable future, five have agreed to undertake past business reviews (which may result in consumer redress), and one will only purchase second-hand SRB contracts from other firms.

The FSA says if customers with existing SRB agreements have concerns about their agreement they should in the first instance contact their SRB provider, or seek professional advice.

The FSA had previously identified and published areas of concern regarding financial promotions targeting vulnerable consumers. It had also received intelligence from a lender alleging that one firm was arranging rent-back transactions as buy-to-let mortgages where the properties were purchased by the firm at below market value then inflating purchase prices to defraud the lender.

Additionally, a study by consumer group Which? in February 2011 found advice to rent-back customers to be ‘woefully inadequate’.

In March 2011, the FSA commenced a review of the sales practices of the 22 authorised SRB firms. The most common failings identified by the FSA were:

  • SRB firms did not correctly assess appropriateness and affordability, and customers were not given enough time to consider the agreement;
  • Disclosure of the key facts of an SRB agreement did not follow the correct order, was insufficient and not given at the right time;
  • agreements contained incorrect information and did not meet the FSA’s requirements for tenancy agreements;
  • Sales processes were inadequate and did not allow firms to gather enough information to assess appropriateness;
  • Financial promotions breached FSA rules; and
  • Training and competence, compliance monitoring, and record keeping were all inadequate.

The FSA will now focus on working with firms conducting past business reviews to ensure any affected customers are treated fairly.

FSA head of mortgage and general insurance supervision Nausicaa Delfas says: “Rent-back is often the last resort for struggling homeowners so we expected to see firms treating their customers much better than this report suggests.

“The resulting temporary closure of this market could have been avoided if sale and rent back firms had taken the time to fully understand their regulatory responsibilities and customers’ needs. It seems most were more focussed on their own commercial success rather than the welfare of the customers, with one firm even resorting to fraud.

“This is an example of the type of action that the FSA, and in future the FCA, will increasingly be taking to protect consumers.”

The FSA was given regulatory oversight of SRB by HM Treasury in June 2009 and implemented an interim regime a month later. This was replaced by a full regime in June 2010