Julian Knight: Codes of conduct do little to stop bad practice

If I were handing out awards for pandering to business over consumers, then the Office of Fair Trading would be preparing an acceptance speech. Last week, it caught the headlines for the exorbitant pay of its chief John Fingleton – the highest paid public servant in the country, on £275,000. But more routinely and less noticeably the OFT gave its official stamp of approval to yet another industry code of conduct.

This time we have professional will writers. The code sets out really basic protection but does nothing about the most worrying abuse going on: when will writers sneakily place themselves as the executors of their customers' wills. All is fine until the will-maker dies and the cuckoo in the nest executor reveals its charges – which can be as high as 3 to 4 per cent of the estate plus fees – and when the beneficiaries try to have a proper executor replace the will firm, they often find it impossible.

How do I know this? Because I have seen this happen and suspect that some will-writing services are a loss leader to grab a piece of the executor action. And does the OFT ensure that such activities are outlawed? No not a bit of it. Either they don't understand or they think robbing the dead is a legitimate business practice.

Dangerous commission

The Financial Services Authority reportedly says advisers will be able to keep the commission on all financial products they have already sold even beyond 2012, when the practice of earning commission will be banned. This is dangerous because it will fuel what has been going on over the past few months in the run-up to the ending of commission. Providers have been paying seriously large commissions – sometimes as high as 10 per cent of the sum invested – to advisers that recommend what are frankly crummy products.

It's a last hurrah for the sharp-suited adviser, who can set up an income stream into the future by recommending commission-paying products today. If it were clear to them that they would not benefit beyond 2012, it might dissuade them from taking the greedy route which has causednearly all modern mis-selling scandals.