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Bank advisers cop flak |
ASB Bank's chief manager managed funds Roger Perry says he is not surprised that the Banking Ombudsman is starting to get more complaints about bank managed fund products.
He expects customers will start questioning their investments after 18 months of negative returns.
While he acknowledges ASB does get some complaints, and the number has been increasing, Perry says the advice process has been improving over the years too and it is now a very robust process.
Like many of the big organisations offering financial advice in New Zealand ASB has developed a system that ensures the advice people are given is consistent and the funds and their characteristics are well explained to potential investors.
This includes tools such as graphs to illustrate volatility, and the probability of returns. At the end of the advice process customers sign a document saying they understand the fund they are buying.
Perry says some of the complaints come about because the investor either hasn't fully disclosed their position at the interview stage, or that they have given incorrect information about the level of risk they are prepared to take on.
Most of the complaints are resolved through the bank's internal complaints procedure. The ones that remain unresolved are ones where then go onto the ombudsman.
Perry says the bank has nothing to hide and it welcomes scrutiny from the ombudsman.
"We are not defensive at ASB."
One of the ombudsman's observations was that bank's are too aggressive in their sales process.
Perry is unrepentant about ASB's prospecting and sales process. He says an organisation such as ASB Bank has a "sales and service culture". Therefore by its very nature advisers will be out their actively selling bank products.
As part of the process advisers are informing people about the products in a proper and structured way.
A spokesman for the ANZ Bank declined to comment on the ombudsman's comments, saying it was appropriate that the bank remain "silent" on the issue.
Financial Planners and Insurance Advisers Association chief executive Phillip Matthews says that the case study is interesting as it shows the right product was sold, and that it was properly explained to the client, but the client didn't fully understand what she was buying.
The real criticism is over the, unnamed, bank's prospecting process.
Matthews' word of caution to the advisers is that they need to be careful about the way they prospect, or find, new clients.
"(Advisers) should ensure they are as ethical in their method of prospecting as they are in the way the way they look after a prospect once they become a client."
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