View more on these topics

Misplaced trust in banks

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



Regulator hits mortgage brokers with ban and fine

The FSA has fined one mortgage broker £31,500 and banned another for reckless practices which allowed false mortgage applications to be made to lenders. Ngozika Louise Ogboru who ran JN Finance (UK) Limited, a mortgage broking firm in Harrow, has been banned from carrying out any regulated activity. Ogboru was the only approved person at […]

Hawksmoor’s ‘would I buy it today’ test

Multi-manager Hawksmoor says monthby-month performance has its place in the management of its Vanbrugh fund of funds even though more weight is placed on longer-term performance. The firm says that as Vanbrugh is not an absolute return fund that aims to outperform a cash benchmark, it does not focus too much on monthly performance figures […]


News and expert analysis straight to your inbox

Sign up


There are 3 comments at the moment, we would love to hear your opinion too.

  1. When the IFA community is up against this sort of mentality, along with a regulator that adopts a shamelessly laissez faire attitude towards the banks, what can we expect?

  2. Is there not a wider issue to be addressed here outside of the somewhat tired ‘banks are the route of all evil’ arguement.

    Consumers are looking for someone to trust with their money, and their financial future.

    Banks have faced a huge amount of negative press over the past two years, much of it warranted, however a greater proportion is not as your local bank cashier is hardly an appropriate scape goat for the economic turnmole the UK has been through.

    However the IFA community is hardly in a position to sling too much mud as if your local friendly IFA were the answer then customers would not continue to seek advice from banks.

    The reality is that for as long as we continue to be divided as an industry we will never move the perception in the customers eyes of financial advisers.

  3. Was Captain Mainwaring really a respected and trustworthy pillar? I have only seen five minutes of Dad’s Army, but by coincidence, the episode in question centred around an elderly shut-in miser who had accumulated a large hoard of money. When I happened to flick on Captain Mainwaring had found out about this hoard, and was in his office pronouncing to his clerk (or someone) that for his own good the miser must be parted from his cash “and buy an annuity”. The tone of the scene left no doubt that it was actually for the good of the bank. My dad and I fell about with hoots of ‘Plus ca change!’

    I don’t know how the episode ended but I’m guessing from the way comedy usually works that the miser eventually outwitted and humiliated Captain Mainwaring and held onto his cash. In real life, sadly, it doesn’t usually work that way.

Leave a comment


Why register with Money Marketing ?

Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

News & analysis delivered directly to your inbox
Register today to receive our range of news alerts including daily and weekly briefings

Money Marketing Events
Be the first to hear about our industry leading conferences, awards, roundtables and more.

Research and insight
Take part in and see the results of Money Marketing's flagship investigations into industry trends.

Have your say
Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

Register now

Having problems?

Contact us on +44 (0)20 7292 3712

Lines are open Monday to Friday 9:00am -5.00pm