Financial Services

[User269]

I was astounded to read that people who had been missold PPI were now paying 'specialists' to get their money back (for a fee), even though there is abosolutely no need. I mean, give a sucker a break and all that.
And now I read that endowment/interest only mortgages are still being sold. I thought this con was put to rest 25 years ago, but no, people are still buying them even though there's no possible chance that they will be able to pay off the full loan at the end of the mortgage term.
I nearly found myself getting angry at people for being stupid enough to buy these products, then I remembered what it's like to be busy and to trust financial advice. What's wrong with our financial services industry??

PS Those of you who are lucky enough to have an ISA or other savings.........have you checked your interest rate lately? 0.5% or less on a lot of them.......are they having a larf??

PPS These are the same people who are largely responsible for our current economic crisis.

I'm not reading any replies. I'm going out on my bike in the rain. BAH!

 

[vernon]

Endowment and interest only mortgages are still being sold but with very tight rules and prominent health warnings.

For those who read the finance pages in the quality press at the weekend, there's regular warnings about the need to regularly review the interest rates of all savings accounts.

Moneybox on Radio Four does a similar job.

 

[Flying Dodo]

Generally, to get an interest only mortgage these days, you need at least a 50% deposit.

 

[BigonaBianchi]

I was an IFA in my previous life....been out of it since 2006 now...good ridence to bad rubbish really.

 

[User269]

I lied about not reading any replies. Does that make me a banker?
Can I have my bonus now?

 

[asterix]

I'm not reading any replies. I'm going out on my bike in the rain. BAH!

 

[Globalti]

We live opposite a Hungarian bloke who is a self-styled IFA. Mrs Gti has worked for him on occasions for a bit of extra cash but is always shocked at his cavalier attitude to compliance and the rules. Until recently he was selling lots of products including mortgages with the dodgy PPI insurance schemes attached and now, guess what he's doing? Yes.... helping people to win compensation for the dodgy PPI schemes they were mis-sold!

 

[srw]

Take a look at www.fsa.gov.uk. There's probably a whistle-blowing mechanism for dodgy geezers.

 

[asterix]

Can I report the FSA on it?

 

[BigonaBianchi]

The IFA's these days (and when I was around) have to be the most heavily regulated in the world. The compliance officers seemed to out number the advisors and the amount of paperwork was stiffleing. It was extremely hard to 'missell'...even if you felt so inclined or driven to desperate means by over greedy sales directors etc.
I only dealt at the higher net worth of client...but saw PPI sold as a matter of course by bank cashiers /personal bankers etc on every personal loan they sold. They were heavily targetted on PPI and were not allowed to process a loan sale without PPI !! It becaome the numero uno KPI target for front of house bank staff back then. Pure bloody minded greed on behalf of that particular 'ethical' bank.

Some of the more serious issues around back then were pension transfers into Personal plans, or section 32 buy out bonds..with profit bonds sold as guaranteed investments with little of no mention of the MVR (Market value reduction) which became a big issue around 2005....so many clients were then switched out from those bonds into others suffereing a large MVR (for a fat commission of course)....that in itself wasnt always bad advice given individual client circumstances and risk profiles, th eissue was that in many cases they were not told about the MVR clause in the contract...or led to believe verbally that it would never be applied.

Low cost low start mortgae endowments was another one...

..and then there was the classic whole of life joint life second death policy sold to cover an inheritance tax liability that could have been wiped out via proper (cheaper) will planning/will trusts etc.

having said all that, my experience was that 95% of IFAs were good honest decent people who in most cases really did affect their clients lives positively. The problems came when the bosses got commission greedy and set unrealistic sales targets which threatened the IFAs job if they didt achieve them...the iFAs were under immense sales pressure back then.

I have no idea what it's like these days, but I'll wager its even more heavily regulated than ever and that only IFAs dealing with seriously high net worth clients are surviving.

Lord knows what was happening with tied advisors back then...they must have had it even worse.

 

[siadwell]

There's all sorts of dodgy blokes trying to extract a few quid from the unwary.

I recently applied for an EHIC card as a replacement for one that had expired. Two minute job (name, address, DOB, NHS/NI number) and completely free via the official NHS website ehic.org.uk. But google "EHIC" and there are websites with URLs like nhsehic.org.uk and applyehic.org that will do the job for you, for a small admin fee of course.

 

[ASC1951]

... my experience was that 95% of IFAs were good honest decent people who in most cases really did affect their clients lives positively. The problems came when the bosses got commission greedy and set unrealistic sales targets which threatened the IFAs job if they didn't achieve them...

Quite right. My experience - slightly removed from financial services - was that very little mis-selling can be blamed on IFAs and their staff. For years IFAs have had to be relatively well trained and, as you say, heavily regulated.

Most consumers who suffered from bad advice did so at the hands of banks and building societies. Led by the Halifax, their business model depended heavily on putting counter staff through short courses and selling every possible add-on to anyone who bought one of their services. At the time the general view was that these institutions could be trusted not to fleece their customers - "members", in the case of mutuals - so regulation of this part of their business was minimal. Now we know better.

 

[Flying Dodo]

Only 4% of regulated firms have a complaint referred onto the Financial Services Ombudsman service for further investigation. However, the overwhelming majority of the actual complaints are due to the banks and their mis-selling tactics. There are a core of 150 firms mainly consisting of banks and general insurers which take up 90% of the Ombudsman Service's time. PPI claims currently make up around 50% of all complaints.

Complaints against IFA's only accounted for 1.5% of all complaints.

 

[TVC]

There's all sorts of dodgy blokes trying to extract a few quid from the unwary.

I recently applied for an EHIC card as a replacement for one that had expired. Two minute job (name, address, DOB, NHS/NI number) and completely free via the official NHS website ehic.org.uk. But google "EHIC" and there are websites with URLs like nhsehic.org.uk and applyehic.org that will do the job for you, for a small admin fee of course.

In a similar vein:

Do you want an ETA (Electronic travel authority - electronic visa) to travel to Australia?

Visit this official looking site which appears as the first pick on google and they will charge you AUD39:
http://www.travelvisaaustralia.com/travel_visa_australia/

If however you scroll down several entries on the google page you finally get to the official Australian Government site which charges AUD20:
http://www.eta.immi.gov.au/

Not bad business, AUD19 per mug for linking your site direct to the Oz government webpage. I nearly fell for it, and I reckon I know what I'm doing with this kind of stuff.




With regard to PPI, my dear old dad worked in the financial services industry, and one of the first bits of advice he gave me as I ventured out on my own in the world was "Never get payment insurance, it's all bolloks". My dad hardly ever swore.

 

[srw]

Complaints against IFA's only accounted for 1.5% of all complaints.

On the other hand, 25% of pension-related complaints, and 14% of investment-product-related complaints were made against IFAs - so in the markets they operate they are regularly complained about. And the complaint-upheld rate is second only to PPI intermediaries.

Meanwhile the FSA complaints data shows that personal investment firms (including IFAs) paid out more money as a result of customer complaints than any other firm category other than banks (swamped by PPI mis-selling) and GI intermediaries.

(But I'd still seek out an IFA over any other kind of firm for advice on personal finance; I'd just be fairly careful and shop around until I found one I thought had a good understanding of what I really wanted.)