Another NMPI fine

Westwood Financial lost their fight with the Tribunal against a £100,000 fine for misselling geared traded endowment policies (GTEP).  There were examples of clients taking out mortgages to invest in GTEPs; a form of double gearing, which is very high risk particularly for unsophisticated clients.  On the face of it this seems an open and shut case of blatant misselling without any redemption.  How could anyone think this type of activity was ever suitable for the clients concerned or indeed any client?

Some of these fines take us right back to the old adage that you should 'not put all your eggs in one basket'.  However, many advisers seem to put most of their client's assets in one fund and it often turns out to be the one fund they should not have used e.g. Arch Cru.

Another thing that any adviser 'worth their salt' should do is to 'follow the money'.  If you cannot see where the underlying assets are invested then do not 'touch it with a barge pole'.  There are quality advisers out there who, despite the fact the fund was regulated, did their homework and did not invest client's money in such assets.

Financial advisers need to protect themselves and their clients by making sensible assessments of the funds they use and using tools such as diversification and good instinct to do a proper job for their clients.  If it smells bad it probably is and the consequences are not worth it.

Of course apart from good financial planning and appropriate research there still appears to be a rump of rogues that everyone should avoid like the plague.  It is only a shame that the rest have to pick up the bill through the financial services compensation scheme (FSCS).

Search News

News Categories

Here are some common categories for you to search by...