Investment Mis-Selling News January 2016
Published on:
The UK’s biggest banks find themselves faced, once again, with significant fines and the FCA are experiencing criticism for cover-ups and other controversial suggestions. Here’s a round-up of the latest investment mis-selling news.
Latest Investment Mis-Selling Stories
Santander to start offering investment advice in the UK again
Two years after being hit with one of the biggest investment mis-selling fines to date, Santander UK have announced that they will be re-entering the UK investment advice market. Many high street banks stopped offering investment advice around three years ago after the introduction of the retail distribution review – which was expensive for banks to implement.
Nathan Bostock, chief executive for Santander UK, said that the decision marked “another crucial element to establishing relationships with customers.” At present, only customers with over £50,000 to invest will be offered this service.
RBS promises customers it will clean up its act
The Royal Bank of Scotland is setting aside another £2.5 billion to cover legal claims over mis-selling and said that they expected to make a loss for 2015. Although the bank has had to set aside billions for fines and compensation and failed to make a profit in seven consecutive years, RBS chief executive Ross McEwan remains optimistic about the bank’s ability to win back the customer’s trust:
“We will now continue to move further and faster in 2016 to clean up the bank and improve our core business,” he said. “This announcement is a further step towards addressing legacy issues and building a great bank for our customers.” (2)
FCA under fire – accused of covering up mis-selling scandal
The FCA faces fresh criticism this month for allegedly covering up an investment mis-selling scandal. The regulator launched an investigation two years ago into the claim that banks and fund managers were ‘bribing’ financial advisers to sell their products.
However, it then announced that the report would not be published, leading many to accuse them of covering up a new mis-selling scandal.
The FCA was widely criticised last month for announcing that they would consider the reintroduction of commission on investment advice. This is controversial given that staff incentives are considered one of the biggest contributing factors to investment mis-selling.
Other Stories
High street banks to launch ‘robo-adviser’ for investors
Several high street banks, including Barclays, RBS, Lloyds and Santander, will be launching a ‘robo-adviser’ service that offers investment advice online, sparking fears of further mis-selling linked to unregulated advice. HSBC is the biggest high street bank to say they are not considering robo-advisers.
Banks under new financial pressure
The UK’s biggest banks are planning to set aside as much as £5bn extra to cover fresh mis-selling litigation – on top of the £27bn already allocated so far.
‘Ultra-wealthy’ Dubai investors win $70 million mis-selling compensation
Dubai’s Bank Sarasin-Alpen has been ordered to pay the Al Khorafi family over $70million in mis-sold investment compensation. The family were advised to invest in $200million of structured investment products in 2007 and 2008, but these were found to be unsuitable for the family’s requirements.
Next scandal – IT failure?
Banks are concerned about the threat of regulatory fines for IT failure, which may result in more compensation being paid to customers.
