Tag Archives: business reviews

Watchdog bans RBS ‘Last Bank in Town’ Ads (Article by Rachel Dalton in IFAonline.co.uk on 15.02.2012)

15 Feb

The Advertising Standards Authority (ASA) has ruled that TV ads for Royal Bank of Scotland (RBS) and Natwest misled consumers.

The ads for Natwest and RBS both included scenes where bank employees pledged their banks would “continue to provide banking services wherever we are the last bank in town”.

However, a town councillor and the Campaign for Commuity Banking Services complained there are some instances in which the banks have withdrawn banking services where there are no other branches.

The complainants said Natwest, which is owned by RBS Group, had closed a branch in Farsley, Yorkshire despite being the last bank open in the area.

RBS had substantially reduced its opening hours or replaced branches with a visit from a mobile bank in some locations, the complainants added.

RBS said the ads did not specify that the bank would keep branches open, but that it would only continue to provide “banking services” to certain areas.

The bank argued it is keeping to this pledge by offering services through branches within a larger area, or via mobile banks.

However, the ASA ruled the claims made in RBS and Natwest’s ads were likely to be understood by consumers that there would not be bank closures or a reduction in opening hours, and therefore were misleading.

Blog: The complexity of simple products (Article by Owain Thomas in IFAonline.co.uk on 15.02.2012)

15 Feb

Phil Jeynes warns that removing components from simple products may mean weaker cover for clients.

Nobody so far has been able to explain to me exactly what they mean by a “simple product” in the context of protection.

Whenever I’m asked if I think simple products are a good idea, I say “yes”, but I contend that the products we have at present are simple enough.

How much more simplistic than life insurance can you get?

The fixation seems to be around the complexity underlying some protection products – serious illness cover, for example covers 161 conditions and critical illness contracts offer protection for dozens of diseases; surely this means they are too difficult for Joe Public to understand?

While stripping elements from products will undoubtedly make them easier to grasp and might result in a lower premium (although how much lower is a separate debate), it is not really what the industry needs.

Take cars as an analogy; I want to get the most value for my money and if that means the manufacturer using technological advancements and smarter designs to keep prices low then great.

What I do not want is for the seatbelts and airbags to be removed and the brakes compromised in order to make the product “simple”.

Removing component parts of a protection policy will result in weaker cover for the client.

The reason some elements of our plans are complex is that the issues they aim to protect against are equally multi-faceted; cancer is not a simple disease, it ranges vastly in its severity, aggressiveness and in the likely outcomes for the sufferer.

Our products need to be designed to deal with this complexity – not to shy away from it for fear of being confusing.

It is certainly true that customers can be bamboozled at point of purchase but this is not a problem unique to protection, virtually every purchase one makes can be confusing without appropriate guidance – be that online, in store or independently.

I remain convinced that intermediaries are the key to decent, appropriate protection sales.

Giving them the training, sales and marketing support to distribute our products is far more important than designing inadequate, cut price contracts in the hope that simplicity equals sales.

PPI serves as a lesson that this thinking is not always sensible.

In any case, the simplest products do not always become the best sellers; by far the most basic protection product is whole of life cover and this represents a small proportion of annual sales.

That our policyholders understand their cover is crucial, that they are conversant with every facet at point of sale is not.

To return to my earlier analogy I do not need to know how leverage, friction and hydraulics combine to make the brakes of my car work, I just need to know that they will stop me when I push the pedal.

Phil Jeynes is head of account development at PruProtect.

Towry claims branded ‘unsustainable’ as case dismissed (Article by Sam Macdonald in Fundweb on 15.02.2012)

15 Feb

The High Court has dismissed all claims brought by Towry against Raymond James and seven former Edward Jones advisers, with the judge branding them “unsustainable” and “entirely without foundation”.

 

Andrew Fisher

Andrew Fisher

In a damning criticism of the case heard at the Royal Courts of Justice in London last July, Mrs Justice Cox roundly rejected the claims made by Towry that Raymond James had encouraged or been reckless in allowing Wayne Hayhurst, Tracy Simpson, Tom Spain, James Chandler, Barry Bennett, Pieter Burger and Stuart Hutton to breach non-solicitation clauses in contracts which prevented the former Edward Jones advisers from contacting the clients for up to 12 months.

Towry brought the case in April 2010 after 388 clients with assets totalling £33m transferred to Raymond James. Towry also alleged Raymond James and the advisers had “conspired” with each other in some instances to breach their Edward Jones contracts.

Raymond James and the advisers argued Towry had provided no evidence of unlawful solicitation and allowed only seven days for new employees to agree contract terms before withdrawing any employment offer.

In her judgment handed down on Tuesday, Mrs Justice Cox said: “Having regard to the whole of the evidence in this case, the allegations against Raymond James do not withstand scrutiny.

“There is no evidence to support a suggestion that Raymond James deliberately set out to induce a breach of contract by any individual defendant. The suggestion that Raymond James either knew or was reckless as to whether any defendant was going to solicit any client is in my view unsustainable, as is the suggestion that they closed their eyes to the obvious.”

On the claim that the advisers were conspiring to breach their contracts, she said: “I reject as entirely without foundation in this case, the allegation that the conduct of the individual defendants prior to leaving their employment with Towry was consistent with a ’pre-existing plan’ to poach Towry’s clients.”

 The judge awarded total legal costs against Towry of £1.2m. Towry had sought damages of £5.9m.

Law firm Faegre Baker Daniels, representing Raymond James, says the costs represent the severity of the allegations. Litigation partner Robert Campbell says: “All the claims against all the defendants were dismissed and the judge made the most generous cost offer she is able to do.”

Peter Moores, chief executive of Raymond James, says: “The judgment confirms the advisers did not breach their restricted covenants, that there was no misuse of confidential information and there was no conspiracy to injure Towry EJ.”

Andrew Fisher, chief executive of Towry, says: “We did not undertake this action lightly but to protect our legitimate business interests for our clients and shareholders.”

RBS Bankers Arrested in HMRC Tax Probe (Article by Natalie Holt in MoneyMarketing on 13.02.2012)

13 Feb

Four bankers from Royal Bank of Scotland have been arrested in a tax fraud investigation, according to reports.

The BBC reports that in addition to the four current RBS employees, one former RBS employee and staff from two other banks have also been arrested.

 The arrests were made on Wednesday as part of a three year investigation by HM Revenue & Customs into people suspected of evading tax by using a film finance loophole.

An HMRC spokeswoman told the BBC: “As a result of an ongoing HMRC investigation into tax-related criminal offences, HMRC has arrested a number of people, some of whom work for UK banks.”

She added that the arrests were related to the individuals’ financial affairs, and not related to their work for the bank.

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