However under the Financial Service’s Authority’s (FSA) gaze, such an approach has become increasingly difficult for those in the financial markets. This is something Sesame recently found to its cost, and the intermediary firm has been left with a fine for £330,000 for failing to treat its customers fairly in regard to complaints made in relation to structured capital at risk products (SCARPs).
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Announcing the fine, the regulator said: “After the FSA identified the problems, Sesame took prompt action to ensure all affected customers were compensated and engaged external advisers to review its SCARPs complaint handling procedures and train its staff.” Well, of course it did – the firm had little option and having failed to meet clients’ complaints properly in the first place, was forced to reassess its approach.
The point here is really twofold. In the first instance, the whole sorry mess highlights the importance of taking client complaints seriously and dealing with them appropriately right from the off. Certainly Sesame will wish it had done so and avoided having to write off the princely sum of £330,000. Even for such a large company, having to swell the FSA’s coffers to that extent will not have been a happy task.
However there is also the reputational damage to think of, and for Sesame members this is where the real impact of the fine will be felt.
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Sesame operates on many levels and not just in the investment sector. Nonetheless, everyone under the Sesame umbrella will be tarred by the negative publicity the regulator’s fine carries with it. In such a competitive market, the very last thing that any broker firm wants to be accused, and then found guilty of is not treating customers fairly.
There is no doubt that a large number of consumers will have seen the announcement which was widely reported in the media and for many it will surely raise questions as to whether this is a firm they want to deal with in the future.
How this damages future business remains to be seen, but certainly non-investment advisers will despair at the possible reputational damage they suffer for something that was nothing to do with them. For members of large networks this is one of the potential risks they run. Regardless of how well their own clients are treated, they are liable to suffer because of the actions of others.
This can be difficult to take and for many directly authorised advisers, the very thought of not having complete control over their own reputation is not something they would countenance. For those who have signed up to a network, however, this is something they will have had to decide on for themselves and they can only hope that others do not let the side down and end up damaging their business.
Simon Burgess
Managing director
British Insurance Limited
