London: The Financial Services Authority (FSA) in its 'mystery shopping review' has found that three-quarters of customers of six major banks and building societies received good advice, while there were concerns with the quality of advice in the remaining 25 percent.
According to the review carried out by FSA during March and September 2012, around one-fourth of customers did not get good advice.
Mystery shopping is a tool used externally by market research companies and watchdog organisations to measure quality of service or compliance with regulation or to gather specific information about products and services.
The latest review assessed six major firms in the retail banking sector, focusing on the quality of advice given to customers looking to invest a lump-sum. In total 231 mystery shops took place, FSA said in a statement.
"Whilst we are disappointed by the results of this review, we are encouraged by the action that the firms involved have taken to rectify the situation for their customers," Clive Adamson director of supervision at the FSA said.
Adamson further added that since this review took place, FSA has introduced new rules on investment advice which have increased the professional standard of the advisers operating in the market and have removed the potential for advisers to recommend products that pay the largest commission but may not be right for the customer.
In 11 percent of mystery shops, the evidence suggests that the adviser gave the customer unsuitable advice.
In 15 percent of mystery shops, the evidence suggests that the adviser did not gather enough information to make sure their advice was suitable.
In response to the review, the firms involved agreed to take immediate action. This includes retraining advisers, making substantial changes to their advice processes and controls for new business, and undertaking past business reviews to identify historic poor advice and set this right for customers, the review report said.
First Published: Wednesday, February 13, 2013, 19:42