Alan Steel: Consumers still need better protection against mis-selling

What is alarming is that both of these scandals - along with a whole host of others - happened on the watch of the same sleeping security guard: the Financial Services Authority (FSA).

Last week the Independent Commission on Equitable Life Payments published its report on compensation offered to Equitable Life pensioners, and the Westminster government accepted all recommendations.

That the end of the saga is now in sight is good news and the government should be commended for pushing for a solution after a decade of political prevaricating.

However, the compensation offered is inequitable and in most cases grossly insufficient. It is reckoned that policyholders have lost more than 4 billion of their savings.

I blew the whistle on problems at Equitable Life in April 1997 in this very newspaper, although it wasn't until three years later that the FSA paid attention.

What the FSA was doing in those intervening years is still a mystery and the ten years it has taken to put together a compensation package is a disgrace.

But it seems lessons still have not been learnt. It is still too easy for major financial institutions to sell customers products which don't deliver as promised, or which don't match up to their individual needs.

The latest culprit to be unmasked is Barclays, as it landed a 7.7 million fine for investment advice failings. In short, it seems they were recommending customers should buy a much riskier product than they thought they were investing in and it cost them dearly. Fortunately most shouldn't lose out because compensation will cost Barclays an extra 60m.

A few days ago, Barclays announced it is going to stop offering financial advice from its branches, although it insists this move is not linked to the fine. Whether this is the case or not, I am delighted at the decision and would welcome other banks and building societies taking the same step.

When are investors going to wake up to the fact that, in law, advisers representing financial institutions such as banks are agents of their employers and not the customer?

If you want impartial advice you should go to an independent financial adviser (IFA) who, in law, is the agent of the customer, and who must put the interests of the customer first.

And what a pity the FSA hadn't been strong enough to ban Barclays from giving such advice. That would have sent a clear message that poor performance in this area isn't acceptable, and consumers' interests are paramount.Instead it feels more like firms can do what they want, as long as they have the cash to pay fines and compensation.

The problems at Barclays and Equitable Life - and others fined for misrepresenting investment risks - show clearly that there are still significant issues to be addressed in consumer protection.

I am not nave enough to believe we can eradicate all such problems, but I do think there needs to be a far harder line taken with firms found to have misled clients, treated them unfairly or duped them into buying inappropriate products.

Sadly, despite 25 years of investment protection regulation, much still needs to be done in simplifying information given to consumers, making sure they are better informed about the advice given, the choices offered and the fees charged.

Regulators, academics and politicians will say this is exactly what they are trying to do, and they will point to improvements in transparency over the years.

However, as an IFA with more than 35 years of experience, I don't believe there is sufficient emphasis being put on these matters or adequate resources being invested in them.

Nor do I think I'm alone - just ask the customers from Equitable Life and Barclays and see what they have to say about the matter.

l Alan Steel is chairman of Alan Steel Asset Management (www.alansteel.com)