7.2 Investment advice in practice
This activity looks at investment advice in practice and how it may not be as good as the templates seem to suggest.
Activity 14 Examples of poor investment advice
Read the letter from the FSA to CEOs of wealth management firms in 2011.
Read the press release and commentary on Bank Santander’s £12.4m fine for not following ‘know your customer’ rules and mis-selling investment products as a result.
The FSA identified significant problems in a number of wealth management firms in 2011 and the CEOs of these firms were warned of this by the FSA. And yet, Bank Santander failed to act on the warning which led to a £12.4 million fine by the FCA in 2014.
What were the main problems with Santander Bank’s advice to clients?
Select the correct answers from the options below.
Answer
It failed to correctly identify customer needs and their attitude to risk. It also failed to check, as it had promised, that products they had sold to clients continued to be suitable over time. Notice how the press release mentions a loss of trust on behalf of customers.
This is not a one-off. See the FCA list of press releases for an insight into the extent of mis-selling.
OpenLearn - Asset allocation in investment
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