Advice, the customer and the law - a study of financial advice

The primary problems identified by the study are that:

• the companies in many cases appear to inconsistently record necessary information about the customer in order to be able to give advice, for example information about the customer's financial situation, knowledge and experience
• the companies in many cases do not appear to properly document the advice they have given
• the companies in many cases do not appear to comply with the requirement to provide the customer with documentation
• the boundary between advice and sales is in some cases unclear

The study was conducted from the customer's perspective. Approximately ten employees from FI visited a total of 40 banks and posed as customers in need of financial advice. FI also interviewed 60 actual customers about the advice they received. The results have been compared to the companies' own information about their procedures for giving financial advice. While the companies themselves consider there to be few problems with their advisory services, the study shows that the picture from the customer's perspective is completely different.

Despite the problems identified in the study, many of the customers were satisfied with the advice they received. The FI customers, whose visits were a part of the study, were more critical.

The following steps will be taken with regard to the supervision of financial advice:

• FI will review more closely the problem areas identified by the study
• FI will initiate a discussion with the industry to review the competence requirements for financial advisors
• FI will recommend that the Swedish Consumers' Banking & Finance Bureau draw up and provide information about the Financial Advice Act

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