30/07/2001

IFAs singled out for criticism by Treasury-backed inquiry

A Treasury-back inquiry into the savings industry has criticised Independent Financial Advisers (IFAs) for being unduly influenced by potential marketing revenues when giving out financial advice to customers.

The review, published on Monday 30 July, will do much to heighten concerns over the issue of unbiased financial information as available to the general public. After examining all products in the long-term savings sector – excepting bank accounts – the report revealed a potential conflict of interest when it came to investment advice given by IFAs, stating that due to the potential misalignment of advisers’ incentives with the needs of their customers “competition within the industry may not lead to optimal outcomes for consumers”.

With-profits funds also came under close scrutiny, with policyholders often given little information on the mechanisms behind what is termed “the smoothing effect” – which supposedly arises due to the surplus funds insurance companies amass from having limited returns to pay out on each year. However, in reality, there is no guarantee that there will be an adequate surplus to take care of any shortfall, meaning that with-profits policies may not be as safe an investment as has been marketed.

The review will now go forward for consultation throughout the industry. (CL)

Related Northern Ireland Business News Stories
Click here for the latest headlines.

25 September 2001
Ryanair calls for common sense not state aid
Ryanair, one of Europe’s leading budget airlines, has spoken out about the need for smart economic strategies rather than state aid as the solution to the current crisis facing the airline industry.
18 September 2001
Airline bosses in crisis talks with Transport Secretary
UK Transport Secretary Stephen Byers has met with airline bosses to discuss the damage that last week’s terrorist attacks in the US has caused to the industry.
08 July 2009
Banks Should Be 'Sympathetic' To Farmers
High-level meetings are being held with the main banks to urge continuing support for NI's farming community. Stormont Agriculture Minister Michelle Gildernew (pictured) set out to underline the impact of the 'credit crunch' on rural businesses and farming.
11 September 2018
Public Who Want To Work In Hospitality Industry Urged To Attend Jobs Fair
Belfast City Council is urging people who are interested in working in the hospitality industry to attend a jobs fair in St George's Market on Wednesday 26 September.
26 March 2013
Insurance Group To Establish Two IT Hubs In Dublin
Taoiseach Enda Kenny TD, today announced that Zurich Insurance Group is to establish two IT hubs in Dublin with the creation of 112 new hi-tech, high-value jobs. The IT hubs represent an exciting and innovative approach to IT service management and security for Zurich in Europe and globally.