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Martin Lewis: Bank staff should not be ‘dressed up’ as advisers

Martin Lewis 150x125

MoneySavingExpert.com founder Martin Lewis has argued problems within banks’ sales cultures go beyond incentives and stem from poorly trained staff “dressed up as advisers” who do not have the “moral compass” to know they are misselling.

The FSA has today published a review into the sales incentive schemes of banks, building societies, insurers and investment firms following a year-long investigation. It found 20 out of 22 firms ran incentive schemes that increased the risk of misselling. One firm has been referred to enforcement as a result.

Financial Conduct Authority chief executive Martin Wheatley, who has led the FSA’s incentives investigation, said incentive schemes have played a role in several recent misselling scandals including payment protection insurance.

Launching the report this morning at a Thomson Reuters event in London, Wheatley said: “Poorly designed incentive schemes are a problem across many industries. Financial regulators have struggled to get to grips with them and many consumers have paid the price.

“We know that dealing with this will not be an easy task. Financial incentives are in many cases central to how businesses operate, and they are at the heart of the problems that have been deeply ingrained in firms’ business models for many years. We need a cultural shift right across the industry to address this.

“Whilst we are looking at our rules and the way we supervise, we expect firms to act now to clean up their act in response to our findings.”

Responding to Wheatley’s speech at the event, Lewis (pictured) said the FSA’s work on incentives represented “a real step change in regulation” but said the challenge will be in delivering such a significant culture change within banks and the wider industry.

He said misselling risk was posed not just by reward schemes but a number of other factors such as the lack of consumer financial education, the poor quality of sales staff and their lack of adequate training.

Lewis argued risks of misselling are exacerbated by “staff who are poorly trained, poorly paid, and who do not even know that what they are selling is wrong. It is not just the incentive. It is the fact that they do not have a ‘moral compass’ to know they are misselling.”

He added: “Many staff within financial services, especially bank staff, are positioned as advisers but they should be called salespeople. This is absolutely crucial. We know they are incentivised to sell, not to advise. If we have to live with that please do not less us dress this up as something it is not which just confuses people.

“Unless we start to crack down on this idea that is all about the sell, sell sell, and not about giving people the right products, then I will standing here in 10 years time saying do not trust your bank.”

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  • Cliff 11th September 2012 at 1:42 pm

    Bank staff often have titles such as ‘Mortgage Manager’ or ‘Sales Advisor’ which are somewhat misleading.

    I don’t like the ‘trainee mortgage manager/consultant positions’ where you start trading before completing your qualifications. I’ve heard of bank investment and pension advisers being targeted to complete their CEMAP and CEFA qualifications within 3 years of starting…

  • GHU 10th September 2012 at 3:28 pm

    All this ‘guff’ about advised and non-sadvised gets right up my nose. Advising someone isn’t about product alone. I get fed up with having to explain to industry experts just exactly what a collateral charge is, or what RBS vs Etridge means, or the FSA definition of sub-prime or that their customers might just have an over-inflated opinion of value, and the a large crack that runs down the wall may not be something that can just be passed off as settlement.

    I accept that bank advisors can only look at products from their own employer and I can accept that brokers have whole of market but advice is surely more than just about price. I don’t seem to remember that CeMAP concentrated exclusively on product

  • Rob 7th September 2012 at 9:32 am

    I have worked in the industry for 20+ years, as both wom and tied. Most recently for a high street bank. The issue is that whilst a lot of advisers do have morals there are certainly many that do not. The banks pay very low basic salaries. The pressure is then on the adviser to make up their salary by maximising what they sell.The policies the banks offer are often very much more expensive than what is generally available wom, and the cover provided by the policies is quite often very poor value for money. So whilst the advice may be good, the solution is often bad for the client.

  • CityBoy 7th September 2012 at 9:14 am

    Anonymous 5 September 7.59pm. How condescending!! Well put Mandy.

  • pete 6th September 2012 at 3:31 pm

    Bravo Mandy Bravo

  • Mandy 6th September 2012 at 1:09 pm

    Dear Anonymous 5 September 7.59pm: I know very well the difference between advised and non-advised sales, having been in the industry for 17 years in a variety of roles, both as a self-employed WOM (yes, I do get it!) broker and within the banking industry. Your ignorance astounds me; why do you assume that banks only a offer non-advised service?

    The point I was trying to make is that I will always put the customer first when providing advice (yes, I’m fully qualified and provide a full advice and recommendation service), but the culture within banks focuses on selling first, customer needs second. And lazy?! Get a life please.

  • Andy 6th September 2012 at 10:08 am

    Whilst not being a fan of Martin Lewis I have to agree with his “moral compass” statement. Being an IFA for the past 20 years and finding the past few years incredably tough, my wife suggested I apply to work for a bank, my reply was guided by my “moral compass”. How can I sell just for the sake of selling, how can I sell a product I wouldn’t take out myself, how could I “advise” something that is not in the clients best interest? I am still an IFA, toughing it out for the sake of my clients!

  • AA 5th September 2012 at 11:03 pm

    Totally agree with Martin. Everyone needs good advice and given the right products.

  • petec1664 5th September 2012 at 10:47 pm

    how does Money supermarket earn its revenue ?

  • petec1664 5th September 2012 at 10:28 pm

    yet again the journalist jumps on the band wagon – if the bank member has industry qualification why cant they be accepted as an adviser after all the industry charges enough for the exams & registrations; why cant someone be rewarded for giving advise – Money supermarket receives commissions from companies where customers use the link from its site. Only recently Martin Lewis was advising us all to go to fix tariffs for our gas & electric. In August 2008, the company via which Lewis owned the website changed from being a limited company Martin S Lewis Ltd to an unlimited company Moneysavingexpert.com the company no longer needed to submit its accounts to Companies House and thus earnings from the website were removed from the public domain and can be kept private change to an unlimited company. not as transparent as the disclosure laws adviser operate under. Congratulations Martin for selling the Company in June this year for £87m

  • petec1664 5th September 2012 at 10:28 pm

    yet again the journalist jumps on the band wagon – if the bank member has industry qualification why cant they be accepted as an adviser after all the industry charges enough for the exams & registrations;

    why cant someone be rewarded for giving advise – Money supermarket receives commissions from companies where customers use the link from its site. Only recently Martin Lewis was advising us all to go to fix tariffs for our gas & electric.
    In August 2008, the company via which Lewis owned the website changed from being a limited company Martin S Lewis Ltd to an unlimited company Moneysavingexpert.com the company no longer needed to submit its accounts to Companies House and thus earnings from the website were removed from the public domain and can be kept private change to an unlimited company. not as transparent as the disclosure laws adviser operate under.

    Congratulations Martin for selling the Company in June this year for £87m

  • Dave 5th September 2012 at 7:59 pm

    Mandy, your comments are scary it must mean you don’t actually know the difference between non advised an advised sales or have any whole of market experience? Ultimately the individual making the sale is RESPONSIBLE the culture of sloping shoulders has to stop now. Any wom advisor still left in the market (thats whole of market for banking mortgage sellers who don’t actually understand) is generally very good. Banks give nothing but bad service on all levels from customers to intermediaries, generally leaving the intermediary to pick up the pieces of their shoddy incomptetence. Banks….lazy workers… greedy bosses and to compliment it we still have a regulator in force
    That has not picked up one ounce of responsibility for this mess!

  • David McGrath 5th September 2012 at 5:08 pm

    This is from the same guy who recommends using a mortgage broker to get their free advice and then just go to the bank and get the product direct. Last time I heard from him he was on Radio 2 telling me what wine to buy for Christmas. He is clearly an idiot.

  • Lee 5th September 2012 at 4:07 pm

    Mandy, I think Martin is a commenting about the difference between advised and non advised sales and the difference between whole of market knowledge and conveyor belt selling (tied/restricted products). Yes your right about estate agents to some degree, but this relates to the FSA’s inhability to make clear the big differences to consumers whilst allowing the banks to market themselves as advisors. Again look at recent ads for an example? Get a cuddly toy, jobs a good un!

  • Mandy 5th September 2012 at 3:22 pm

    Sorry Martin, but you’re wrong this time, and what an offensive comment towards bank mortgage advisers who always seem to come up against it! Shouldn’t the finger-pointing be aimed at the Banks themselves? After all, it is banks who have cultivated the aggressive dog-eat-dog culture whilst paying lip service to “TCF” (customers) and work-life-balance (staff).

    I welcome the FSA’s move to review Bank’s sales incentives schemes – but don’t stop there, there are a few national estate agents who should also be very worried.

  • Mandy 5th September 2012 at 3:22 pm

    Sorry Martin, but you’re wrong this time, and what an offensive comment towards bank mortgage advisers who always seem to come up against it! Shouldn’t the finger-pointing be aimed at the Banks themselves? After all, it is banks who have cultivated the aggressive dog-eat-dog culture whilst paying lip service to “TCF” (customers) and work-life-balance (staff).

    I welcome the FSA’s move to review Bank’s sales incentives schemes – but don’t stop there, there are a few national estate agents who should also be very worried.