Consumer Needs Research

Consumer Research

52
Financial Services Authority

Quality of advice process in firms offering financial advice: findings of mystery shopping research

August 2006

Contents
Foreword................................................................. 3 1. Methodology………………………………………………………………………….
1.1. FSA mystery shopping methodology……………………………………… 1.2. Research International mystery shopping methodology……..

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4 5

2. Mystery shopping high-level results…………………………………..
2.1. Background…………………………………………………………………………….. 2.2. Treating customers fairly: high-level results……………………….

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6 7

3. Findings and key messages………………………………………………..
3.1. Impartiality of advisers………………………………………………………… 3.2. Assessment of customer needs…………………………………………… 3.3. Recommendations………………………………………………………………… 3.4. Communication……………………………………………………………………..

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4. Other findings…………………………………………………………………….. 18
4.1 Unapproved individual………………………………………………………….. 4.2. Failure to follow up………………………………………………………………. 18 18

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Foreword
Between January and April 2006 the Financial Services Authority (FSA) carried out supervisory thematic work looking at the way a sample of independent financial advice firms were taking account of Treating Customers Fairly (TCF) focusing on the way advice is given by firms. The sample included a range of different sized firms and comprised: • • FSA visits to 55 firms; and 50 separate mystery shops conducted by Research International, an independent external research agency.

This piece of thematic work looked at how financial advice firms could improve their advice processes and reduce the risk of mis-selling. It was one of the largest pieces of thematic work undertaken by the FSA and studied how advice is given, identifying some of the underlying factors that can lead to repeated episodes of mis-selling. This paper focuses on the results of the mystery shopping. However, based on the results of both the visit and mystery shopping