But this story is more than just another example of bad practice at the banks.
A recent report published by the Association of Independent Financial Advisers looked at the issue of trust in financial services and shows that IFAs are the most trusted financial service institution, faring considerably better than life insurance companies, banks, credit card companies and building societies. IFAs also scored well compared to tied advisers.
But this research must be seen in context of a wider perception of financial services as a whole.
Trust for the world of finance as a whole is not exactly at an all-time high. Among people under 45, trust in financial services companies of any description is considerably lower than for those over that age and, most important, there is still widespread confusion as to the difference between independent, tied and multi-tied.
It would be tempting to put the Barclays’ debacle down as just another mistake by the big bad banks but without a clear understanding of the difference between the advice offered by tied bank advisers and independent advice, many consumers will simply see this as a further tarnishing of the whole concept of financial advice.
The Aifa report suggests that tied agents should be labelled as company representatives so their status is unambiguous. It is important to state that not all bank advice is poor advice but it should be clear in whose interest they are working.
The independent label is the most important thing that an IFA has to work with and it is encouraging that Aifa’s research shows that independence is valued. But unless people understand the difference, the advantage of independent status is lessened.
That is why it is important that the industry continues to lobby the FSA to try and ensure there is a clear distinction between fully independent, whole of market financial advice and other forms of distribution. Otherwise, stories such as the Barclays’ mess with the Aviva fund will paint the whole industry in a bad light.