The Financial Services Authority has just done a review of wealth management companies - the people who service the needs of the very rich.
There are about 260 of them in the UK.
It sampled 16 of them.
It found, according to the Guardian, that:
14 were a high or medium-high risk of detriment to their customers, where client files were found to have a high risk of unsuitability, or where the suitability could not be determined.
That's systemic failure at a collosal rate.
Two immediate thoughts. First, these are the sorts of people who put client funds offshore. I wonder how many people really want to be offshore on this basis?
Second, these companies are the people who usually speak on behalf of "investors" when demands are made for high returns from companies, a lack of social responsibility, low tax payment and a lack of transparency. It's very clear these people have no idea what their clients want. Why should we believe them when they talk about their clients' needs?
The reality is that, yet again, we see business capturing funds belonging to others (often its tax revenues, here it is wealthy clients' cash) and using it for their own advantage.
Will the FSA now put them out of business?
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Many companies involved in providing investment products, and those employed to hawk them to the gullable, inappropriately decide a product’s “risk rating” on the notion that the public are just too ignorant (which is often the case) to know any better.
A product carrying a “LOW-RISK” rating is far easier to foist onto an unsuspecting public than one carrying a “HIGH-RISK” rating – so miraculously even the most unsafe products/schemes become labelled “LOW RISK”.
This is particularly reprehensible when pensioners are involved (people dear to Richard’s high moral code) who would always seek low risk investment to preserve their life time savings.
A good authority not to consult on the subject of how to accurately “rate” an investment product’s “risk” is the Isle of Man government.