The Association of Independent Financial Advisers has criticised a Financial Services Authority study that used mystery shoppers to find out whether intermediaries are meeting advice-giving standards, claiming that removing the mystery element would make the exercise more useful.
While reviewing the ‘Treating Customers Fairly’ rules, the Financial Services Authority examined a total of 50 small and large firms, and ‘mystery shopped’ a further 50 to find out whether the way the advice was given followed the Treating Customers Fairly principles.
The regulator found that there are six main areas that need improving within the industry. These include a process for establishing clients’ goals and attitude to risk, as well as the production of clear suitability letters.
Training and compliance issues also need to be improved, after the regulator found that the quality of advice is better in firms with good training and competence regimes in place.
Another area for concern was weak systems for monitoring the advice given, and some firms claiming to be independent did not offer the customer an option for paying for an advice fee, sometimes even discouraging clients from looking at this option.
Our view
What utter garbage! The whole point of the exercise is to establish whether advisers are complying with regulations or not.
Making the exercise a 'non-mystery' event puts the adviser on guard and means a true observation of compliance or rule breach or establishing a training need cannot be seen. This indeed would be a waste of time!
We vote for mystery shoppers to keep us and indeed all financial advisers on their toes.