Barclays to no longer give financial advice to the majority of clients.
Following the record fine for mis-selling, Barclays have decided that the advice model is no longer viable for it’s less wealthy clients.
In a story released by money marketing this morning, the bank have stated
“An internal review has been going on over recent months and we have concluded that given the changes to the retail investment marketplace, it is unlikely that this business will be able to deliver a return to justify the investment that is needed.”
Nothing to do with the several hundred million pounds of unsuitable investment bonds being mis-sold by dodgy sales staff and sharp practices then?
The FSA says Barclays is facing a further compensation bill of up to £42m, on top of the £17m it has already paid out to investors.
More to come on this one!
Within the last few minutes released on money marketing “Barclays capital fined £1.12 million”
“Barclays Capital committed a serious breach of FSA client money rules by failing to segregate millions of pounds of its clients’ money for over eight years. This posed a significant risk and the penalty reflects the amount of client money involved in this breach.”
Maybe the FSA didn’t like Bob Diamonds showing at the treasury committee when he said that we should all move on from bashing the bankers…
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January 26th, 2011 at 12:13 pm
Well another few thousand on the job market then!!
So just who his going to advise the less wealthy, after the FSA’s overegulation crippled the industry and we have lost all the companies that used to offer door to door financial and insurance advice. Now even a major bancassurers is getting out.
There are now thousands if not millions of people who are NOT getting any advice, so we will end up with even more people with none or massively under insured, After 30 years in the industry I am ashamed of what has happenened to it. Add to this the banks unwillingness to lend is creating more and more unemployment.
RIP The Financial Services Industry
January 26th, 2011 at 12:32 pm
Did they ever give advice?
January 26th, 2011 at 2:06 pm
Who? The banks, or are you referring to the many many life companies who are now gone,who may have only sold their own products but at least people were getting some advice and products protecting their famlilies and homes with life, accident, sickness, home insurances and pensions. Whilst there were a few ‘advisers’ who perhaps did not do a great job at least there were advisers and companies who offered a service to the great number of the ‘working classes’. However same point applies, who is going to advise these people??
January 26th, 2011 at 2:36 pm
Hi Bob
I agree completely, the protection gap in this country is a national disgrace. So many families are without basic life cover, I think a recent report stated that only 1 in 10 families have life assurance.
It would be interesting to see how many families where protected 20 years ago, in those days it was at least compulsory to have life assuarnce assigned to the mortgage.
Surely this is common sense, sadly something lacking with our regulator.
January 26th, 2011 at 4:50 pm
Whereas I have no love of Barclays bank, the fine was not equitable to the commissions earned and should have been more.
Is it now that we see what they are talking about “majority” means nothing they are probably going for the 80/20 rule where 80% of their profits came from 20% of their wealthier clients?
It leaves more for the IFA who are able to survive the FSA’s one rule fits all dictatorship, this coupled with their salaries out of all proportion to the IFA’S ability to pay for “what service and help they give?” just makes me laugh before I cry.
January 27th, 2011 at 11:35 am
It is clear that there is a lot more to this story than we see. Consideration must be given to the rising costs which are pending to support such an in-house team. The FSA’s objective with the MMR was to restore faith and confidence in the financial sector. Barclays are being hung out to dry! Quite right too. It will be interesting to see how much they will be paying in compensation for mortgage claims! Bad practices seem to run through the business. This is also good news for those good well run IFA’s who survive and prosper from the demand for independent “trusted advice”
January 27th, 2011 at 11:36 am
Hi Ian
We have a report published this morning by E&Y stating that all Banks are likely go the same way. We have been told that for the Banks to provide the financial adviser service, they would need to charge the clients £200 per hour!
January 27th, 2011 at 11:46 am
Kevin – Mortgage Claims! Dont lets get started on this thorny subject, it’s so prickly that it could put the mortgage industry out of business completely. I don’t think Barclays did sub prime mortgages did they?
I know they owned the Carol Vorderman FirstPlus business that has been battered for PPI mis-selling, but no sub prime or self certs?
January 27th, 2011 at 2:27 pm
“The times they are a changing”.
Self interested Cost v Benefits analysis has always been at the forefront of the retail Banking sector business model…when will the general public ever realise!
No doubt the FSA implementation of the Retail Distribution Review together with clients rights to the Financial Ombudsman Service and in turn investors compensation scheme will have had substantive bearing on Barclays decision to withdraw from retail branch financial “advice”
Not a bad thing perhaps. There are many well qualified IFAs and independent firms committed to treating their customers fairly who utilise genuine whole of market research and are capable of filling the gap in providing professional
“advice”.
Maybe there will be some room to accommodate a number of those soon to depart Barclays within the real world of treating your customer fairly IFA sector.
As one door closes another door opens…the times thsy certainly are a changing.