Bank staff need qualifications to sell products to public, says regulator

FINANCIAL advisors and bank sales staff will need formal qualifications to provide advice and sell investment and lending products to the general public from next January.

The Irish Financial Services Regulatory Authority (IFSRA) said yesterday that people working in the financial services industry would need to meet minimum standards to allow them sell products such as mortgages, investments, life assurance and credit cards.

Speaking at the Finance Dublin Conference organised by industry body Financial Services Ireland, IFSRA chief executive Liam O’Reilly said he would consult with the financial services industry before deciding on the necessary minimum levels of competence. Mr O’Reilly said the requirements would apply to staff involved in sales and advice to customers. This would exempt staff working in back-office or administration roles who have no direct contact with customers.

IFSRA said the new requirements would protect consumers who needed advice in relation to financial products and ensure that anyone providing advice had the necessary knowledge to do so. IFSRA’s move follows a number of high-profile cases in Britain where financial services companies received heavy fines for alleged mis-selling of investment products.

Bank of Ireland subsidiary Chase de Vere was fined stg£165,000 (€247,000) by the FSA, the British financial regulator, last December. The FSA said Chase de Vere failed to clearly explain the risks involved in an investment product it offered to customers in a mail-shot.

Banking giant Lloyds TSB was also hit with a stg£1.9m penalty last year for selling high-risk investments to customers who did not fully understand the nature of the products.

IFSRA will issue a consultation paper on minimum standards before Easter and invite submissions from interested parties. Mr O’Reilly also said IFSRA’s running costs would be shared fairly across the financial services industry. IFSRA will send its first invoices in July to banks and insurance companies to recoup the €20m needed to run the organisation.

Mr O’Reilly said it was in the interests of these companies to have a strong and properly-funded regulator.

“Our medium term vision for this new organisation is that industry will have a cost-effective regulator that facilitates innovation, competitiveness and growth,” he said.