Clampdown on financial advisors mis-selling investments
By NICKY BURRIDGE
NEW rules for financial advisors selling investments are set to be introduced in an attempt to boost consumer confidence in the sector following a series of mis-selling scandals.
The Financial Services Authority is calling for retail investment advisors to have higher qualifications, and for firms to keep a closer check on the competency levels of their staff.
It is estimated that consumers lose between £400m and £600m a year through inappropriate or badly sold investment products.
Mis-selling scandals have ranged from people wrongly being sold personal pensions and endowment mortgages, to more recently consumers being persuaded to invest in split capital investment trusts and precipice bonds that were not suitable for them. Earlier this week, Barclays was fined £7.7m and told it will have to pay out up to £60m in compensation for investment advice failings.
But in a bid to restore consumer trust in the sector, from 2013, advisors will have to hold a so-called Statement of Professional Standing, which shows that they have signed up to a code of ethics, are qualified to offer investment advice and have kept their knowledge up to date.