I heard a tale the other day of a 70-year old pensioner who recently popped into his local Barclays to complain about the poor service he had been getting (a cheque had been mislaid) but, more important, to moan about the paltry 0.1 per cent he was getting on several years’ worth of cash Isas.
He had arranged to meet with one of the advisers, who swiftly tried to sell him a packaged account costing £210 a year which would ensure he got his own personal banker. Not too much was said about the cash Isa paying a truly appalling rate of interest. On that subject, the adviser said he would get back to him and he would have to come back in to discuss options.
I assume the reader will have little choice but to step up the risk ladder, given the general reluctance of banks to repay loyalty with relatively decent interest rates on cash savings.
I might be wrong but I am betting that Barclays will try to punt one of its structured products, which have historically proved to be an easy sell during uncertain and volatile times.
Yet banks have history of giving, shall we say, questionable advice to elderly people. Lloyds TSB misselling Scottish Widows precipice bonds is one case that immediately springs to mind. Earlier this month, Barclays admitted that it has not handled itself very well in the debacle over Aviva plans it sold to elderly customers. Mind you, it took the hounding of the press before it put its hands up and apologised.
And now Norwich & Peterborough Building Society is in the dock after losing a case with the ombudsman against an elderly customer sold a Keydata plan.
I have no doubt that giving older people financial advice is a precarious business. Speaking to an IFA last week, he admitted it is a potential minefield, particularly when taking on a client who has already picked up their gold watch and also in these dire economic times. Risk assessment is a whole new ball game, he said.
But my main concern regarding the advice that retired people get from banks is that many trust the clerks implicitly.
I recall one Sunday Telegraph reader who had invested his life savings of around £80,000 in a Scottish Widows precipice bond after taking advice from his local bank manager. He managed to win compensation but I was horrified to learn that he went back to his manager, who had moved on and was working for an insurance company, to get his advice on where to put the proceeds from the payout.
I asked him why he wanted to go back to the man who “missold” him the plan in the first place. He replied that he trusted his bank manager and that it was not his fault he sold him the plan.
Similarly, the reader with Barclays trusts his bank. He is not in the least bit cynical about being sold a package account and he is looking forward to what they suggest for his cash Isas. I have my reservations.
Barclays says that it will learn lessons from the Aviva saga but, given its initial tough stance on resolving complaints, you wonder whether it really believes that it did anything wrong.
With the RDR around the corner and the prospect of more people turning to their banks for investment advice, the outlook does not look too promising. I suspect that many elderly people still think of their bank manager as Arthur Lowe, aka Dad’s Army’s Captain Mainwaring – pinstripes, bowler hat, a pillar of the community, respected and trustworthy.
Yet if Dad’s Army were updated today, dare I suggest that the cockney character Joe Walker, played by James Beck, would be better suited to being the bank manager character.
Paul Farrow is personal finance editor at the Telegraph Media Group