Sesame
MORTGAGE STRATEGY - 30TH APRIL 2007
"Baldrick, deny everything." There are many who subscribe to Edmund Blackadder's approach to life. Doing so has seen thousands in the financial world get away with murder.
But under the Financial Services Authority's scrutiny, such an approach has become increasingly difficult for those in the financial markets. This is something Sesame recently found to its cost.
The intermediary firm was fined £330,000 for failing to treat its customers fairly over complaints made about its structured capital at risk products.
In announcing the fine, the regulator says: "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. It had little choice. Having failed to meet its clients' complaints properly in the first place, it was forced to reassess its approach.
The point here is twofold. In the first instance, the whole mess highlights the importance of taking client complaints seriously and dealing with them appropriately from the start.
Certainly Sesame will wish it had done so and avoided a £330,000 fine. Even for such a large company, having to swell the FSA's coffers to that extent will not have been an easy pill to swallow.
But it's not just about cash - there's also the reputational damage. For Sesame members, this is where the impact of the FSA action will be felt most keenly.
Sesame operates on many levels, not just in the investment sector. Nevertheless, everyone under the Sesame umbrella will be tarred by the negative publicity the regulator's action carries with it. In such a competitive market, the last thing that broker firms want is to be found guilty of not treating customers fairly.
No doubt a large number of consumers will have seen the announcement, as it was widely reported in the media. For many it will raise questions about whether they will want to deal with the firm in the future.
How this damages future business remains to be seen, but non-investment advisers will despair at the possible damage they'll suffer for something that had nothing to do with them.
This is one of the potential risks members of large networks face. Regardless of how well their own clients are treated, they are liable to suffer because of the actions of others. For many directly authorised advisers, the thought of not having control is something they wouldn't countenance.
But for those who have signed up to a network, this is something they will have had to decide for themselves. They can only hope that others do not let the side down.
Simon Burgess Managing director Britishinsurance.com
