A recent reassessment of the risks of several funds have caused some bad headlines for the Barclays mult-tie in Money Marketing. While new sales embraced the new risk system, some clients/customers who had already invested were not informed about the change.
Barclays seems to regard this as not a significant problem but I do think it is worth challenging Barclays on how it sees itself.
You could conjecture (I am about to) that an old model bank operation would have been expected to offer a range of products for investing/saving and insuring. It would offer this to its clients across the income scales. It may not have been expected to offer quite the sort of level of advice as an IFA but it always had the pockets to compensate if things did go wrong. It was efficient at distributing to large groups, so why not use it to close the various much-discussed gaps. In this model, clients or certainly many clients were probably not clients but customers. I might dare to suggest that some early RDR thinking at least had some idea of banks doing this. There might be higher IFA or financial planning levels of advice offered higher in the structure to the better off.
However let’s try and work out the second bank model. Say for sake of argument that a new model bank operation isn’t going to be able to do this anyway.
Its clients are meant to be clients. Charging structures are new style, relationships are ongoing although, I think to date, the details still need worked out. I don’t think a straight read across of adviser charging is possible but some form of ongoing payment of advisers must surely be required rather than anything that apes commission. There is as much regulatory and FOS coverage as for any other adviser although the restricted/independent divide may be significant. Oh yes and higher qualifications.
The first description to me seems to relate to a sales organisation primarily and of course a very big one at that.
The second, even if contained within a bank, and with whatever upsides and downsides banks have, seems to relate to an ongoing advisory business.
I accept this is my characterisation of two ways of regarding banks.
I think it is arguable that some of Barclays’ thinking lends itself the first description rather than the second certainly if they think it is debatable about whether they do not have to advise on a change in its risk assessment for old sales rather than new. But at the moment the regulator wants the second system so Barclays maybe needs to get its head round that.
