Two consulting firms are teaming up to sell an evaluation service for investment product sales by banks.
The firms, Sky Alland, of Columbia, Md., and Furash & Co., of Washington, D.C., will evaluate brokers' performance, and survey bank customers to see whether sales were handled properly.
This approach is better than the "mystery shopper" programs that are being offered by other consultants, according to Rolland D. Johannsen, president of Furash.
Because the information comes directly from consumers and brokers, it provides a better gauge of whether proper disclosures were made and suitable investments sold.
Customer's Point of View
"You have to care what the customer heard and what the customer understood," Mr. Johannsen said.
The firms call the service Mutual Confidence.
As part of the service, Sky Alland will review each investment product sale by a bank, checking for suitability for the customer.
The company will also review checklists that brokers complete of information that should be disclosed.
Customers willing to participate will be surveyed, and asked if proper disclosures were made. Customers may also be asked to evaluate their broker's performance.
Banks Expected to Sign
To date, no banks have agreed to use the service. But Mr. Johanssen said the consulting firms are in negotiation with several institutions and expect a number of them to sign up for the service in the next few months.
He said the consultants are selling the service to all banks, with particular emphasis on larger institutions.
"We believe that banks have a unique competitive advantage in the battle for investment product market share as a result of the industry's reputation for trust and objectivity," said Furash chairman Edward E. Furash, in a prepared statement.
"However, realizing this advantage requires that banks go the extra mile to ensure compliance with not only the letter, but the spirit, of all regulatory requirements."
