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By Huw Jones
LONDON, March 12 (Reuters) - Britain's top banks fail toshow how risky investments are suited to their customers needsand don't "get" what service really means, the FinancialServices Authority said on Tuesday.
The watchdog has picked up concerns over the suitability ofinvestment portfolios, as well as banks' ability to demonstratesuitability, in a significant number of customer files.
"The preliminary results of our latest review into thewealth management divisions of six retail banks are worrying,"FSA Managing Director Martin Wheatley said in a speech.
"We are even more worried that the firms' own compliancedepartments identified a much smaller number. There is adisparity there that suggests some compliance departments arenot sufficiently switched on to concerns over suitability,"Wheatley said.
UK regulators are trying to draw a line under two decades ofmis-selling scandals, from home loans and pensions to loaninsurance and interest rate swaps.
The FSA will be replaced on April 1 with a new FinancialConduct Authority charged with improving how consumers aretreated and ensuring adequate competition in financial services.
Wheatley will head the FCA, saying it will set up adedicated wealth management department to "increase andintensify" supervision of wealth management.
There were wealth managers "who can't hold their hands upand genuinely claim to be providing a great service to theircustomers", he said.
Some elderly widowers with no knowledge of investments wereseeing their assets placed in risky portfolios despitespecifically requesting low risk.
"I've heard of investors with strong religious beliefsexplicitly asking for their assets to be invested ethically,away from areas like armaments, tobacco, gambling, oil or otherenvironmentally grey areas only for their money to beimmediately buried in alcohol and oil investments," he said.
There were still no widespread changes in culture at the topof financial firms despite encouraging noises, he said.
"So, there'll be no hint of any regulatory complacency in2013. I don't believe better customer service is yet anindustry-wide crusade," Wheatley said.
"I certainly don't believe every board 'gets it' yet. Idon't believe they understand what good customer serviceactually looks like."
