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Topics: Santander| Which?| Lloyds TSB Bank plc| Nationwide Building Society| Yorkshire Building Society| Clydesdale| NatWest| RBS| HSBC| Co-operative Bank| Skipton Building Society
The quality of financial advice given by advisers in high street banks and building societies has come under fire after a mystery shop by consumer watchdog Which?
The undercover sting found only five of 37 bank advisers gave ‘good' advice, with the rest failing in areas including obtaining a fact find, assessing attitude to risk and explaining customer rights under the Financial Services Compensation Scheme (FSCS).
Between August and October this year, researchers posing as retired savers visited bank and building society branches on the premise they had a lump sum above the £85,000 FSCS deposit limit to invest.
They met with 18 advisers claiming there was no cost for their advice. One Yorkshire Bank adviser told the researcher to invest £50,000 in a bond, but did not disclose that this netted the intermediary some £4,400 in commission.
Elsewhere, 17 advisers recommended complicated and high-charging investment bonds but four failed to mention the exit penalties - which were as high as 12% in some cases - if the customer withdrew the money in the first five years.
A Santander adviser gave unclear information about a structured product and claimed the FSA had given the bank "special permission" to invest more than 10% of a customer's money in the product.
FSA rules state no more than a tenth of an individual's assets should be invested in a single structured product without the adviser first conducting further suitability tests.
The Which? research also put independent financial advisers (IFAs) under scrutiny. It found four of the six it assessed gave ‘good' advice.
Richard Lloyd, executive director of Which?, said the investigation suggested consumers "should always talk to an IFA" before investing. He promised to deliver the findings of the research to the FSA. "It's shocking to see such low standards," he said.
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Kerching! (2)
Lee Robertson is spot on. I doubt the FSA will ever get to grips with the banks. Banks are a very powerful lobby which no-one, not the Government, not the FSA are prepared to take on.
Posted by: Neil Shillito
THIS IS NOT NEWS
Hector (Teflon Shoulders) Sants – NOTE TO SELF CANCEL: ‘Helicopter Rides on Taxpayers Money’ ORDER: ‘Which’ magazine
Posted by: Keith Jayne
surprise
If you are stupid enough to think the bank give advice then quite frankly you deserve what you get...poor pensioner or not....stop bleeting... FREE LMAO
Posted by: Spike
Surprise Surprise
I really hope this gets the wider publicity it deserves. Just passing the results on to the FSA is pointless. They have been complicit in allowing situations like this to develop. One only has to look at the breakdown of FOS complaints to understand there is a systemic problem within bancassurance. I know there are some very good and ethical advisers working for banks, but they are hamstrung by sales targets. It is the whole culture within the banks that needs to change, and unfortunately I don't see RDR coming anywhere near close to doing it.
Posted by: Andy
What's New?
Banks & building societies have been doing this for years.The FSA turn round and say that as lomg as the charges are clearly stated, it's not a problem. As they seem to spend their lives thinking up new stupid rules, perhaps they can address this situation. Or do they all expect to work for a bank/b.soc in the near future? I have a Britannia KFD here which shows commission on a bond of 10.1% being recommended, I am informed, to a non-taxpayer.
Posted by: David Cowell, Myddleton Croft
This is not exactly news!
Surely we all realise by now that regulation is not designed to help the poor! The rich can afford to pay fees and will save money at the same time. The poor are left to the mercies of the banks and building societies. All the staff are now expected to sell, but getting some basic advice is not easy. Scant attention is also paid to confidentiality in the branches when asking for help.
Posted by: John D
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8.8% - Kerching!
It doesnt matter how often we hear that the FSA are monitoring commission levels pre RDR implementation my heart always sink when I see this kind of story. If it is true then the Yorkshire have a corporate strategy to take 8.8% initial commission on bonds. Have they noticed current returns and inflation rates? The contempt with which these large insitutions treat their customers is truly staggering.
Posted by: Lee Robertson