BLOG: AXA let down thousands of customers, but it’s not always like that…

Written by:
Joanna Faith on how AXA’s wrongdoing should not cast a shadow over the entire financial advice industry.
BLOG: AXA let down thousands of customers, but it’s not always like that…

The financial services industry’s mission to regain consumer trust hit another stumbling block today after the regulator exposed serious wrongdoing by AXA Wealth Services staff.

According to the Financial Conduct Authority (FCA), between September 2010 and April 2012 AXA’s tied advisers based in the branches of Clydesdale Bank, Yorkshire Bank and the West Bromwich Building Society gave poor investment advice to customers, many of whom were elderly and retired.

The firm has been hit with a £1.8m fine as punishment and thousands of customers could be in line for compensation.

Although AXA has taken steps to improve its sales process, the sheer lack of regard for its customers during the period in question is remarkable. It seems the firm simply overlooked the basics of financial advice.

There was no proper process in mind for measuring whether products were suitable for customers in terms of the risk they were willing or able to take. There were gaps in customer files which suggested that AXA’s advisers may have never performed comprehensive background checks on their customers before selling them products. And AXA advisers did not explain to their clients properly why the particular investments were chosen for them and why they were deemed to be suitable.

The fact that only 82 of the 26,000 “financially inexperienced” (the FCA’s words, not mine) people who received advice made a formal complaint probably explains why these issues went undetected for so long.

This latest episode will leave a particularly bad taste in the mouths of consumers whose faith in the financial services industry is already at rock bottom.

The victims, who presumably sought financial advice because they didn’t feel they could make important decisions about their financial futures – and those of their families – alone, were hugely let down by the very ‘experts’ who should have had their backs.

But financial advisers shouldn’t all be tarred with the same brush. They can make a real difference to peoples’ futures.

Luckily, the regulator has taken action to help improve the financial advice space.

Under the retail distribution review, which came in at the beginning of this year, all financial advisers – whether independent or restricted – are subject to strict rules meaning they will have to have obtained a certain level of qualification before they can give any advice. They will also have to offer clients a transparent and fair charging system and be clear about the service they are offering – whether they are fully independent or not.

AXA’s advisers have not covered themselves in glory but the whole industry shouldn’t be pigeonholed as a result. As in any line of business, there are good players and bad players. It’s just a case of picking the right one.

Joanna Faith is editor of Your Money


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