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Panorama to lift the lid on bank advice

Bank advice has again been put under the microscope after a BBC Panorama investigation found advisers in high street banks misleading consumers over potential investments.

The show sent two undercover reporters into high street banks under the guise that they had £90,000 to invest and wanted advice on potential investment opportunities.

One was told that on no stage could he lose that money. The bank adviser said: “It can’t be that you have £50,000 and one day you look at it and it’s zero. It simply can’t happen.”

Speaking on the programme, Bestinvest senior investment adviser Adrian Lowcock said: “It has not been very clear. Charges were not very well explained, risk was not very well explained and fact finds were rushed. On some occasions we saw misleading on the charges conversion and confusion on risk conversations and that doesn’t seen fair on clients.”

The show also details an investor who went to Abbey National – now Santander – to invest an £11,000 sum. Despite insisting that it was crucial the money was safe, the figure had more than halved in six months.Santander turned down her complaint of misselling only for the Financial Ombudsman Service to order the bank to repay the amount lost, plus interest. The investor was still out of pocket after using a claims firm to help her recoup the losses.

In January, the FSA fined Barclays Bank £7.7m for advice failings relating to its sale of Aviva funds. Last month, the FSA fined Bank of Scotland £3.5m for mishandling complaints about its investment advice and ordered it to pay £17m compensation to customers.

The show is set to air on BBC One at 20.30 tonight.

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Comments

There are 26 comments at the moment, we would love to hear your opinion too.

  1. I hope that someone at the FSA will watch Panorama and realise that the RDR will only encourage more people to be ripped of by bank staff who have targets to meet. I know this is wishful thinking but one can only hope that the FSA can at least admit their mistakes and take another look at what they are doing to advice in this country

  2. …………..well .who would ever believe something like that could happen,.lol………

    lets hope the FSA are allowed to watch this !!!

  3. are they allowed to stay up that late…. theres always Iplayer

  4. Funny – I remember reading and commenting on this approx 5/6 years ago and along with half the IFA community. The Banks are far too big, have too much influnce over the FSA and most of the staff at the FSA are from the Banking industry. As before it will all fall on deaf ears. Take too long to bring to court and then they will just pay up look big and increase customers charges to cover their loss.

  5. Does anyone think that the cretins at the FSA know anything about life outside their Ivory Tower?
    Even if they did watch the programme they are too arrogant to learn by their mistakes.

  6. Interesting comment that the Client was still out of pocket using a Claims Company…she would have had the same outcome complaining directly to the ombudsman.

  7. You can see how worried these banks are about this bad press – the article criticises Santander and yet they’re running an article for their bank in the top corner of the article!!

  8. I ran a campaign about Chelsea building society capital protected product and even got a petition signed by the general public. I sent this to my local MP Daniel Poulter and have had no action whatsoever, so what hope has the British consumer.when even our own politicians don’t take the problems with bank assurance seriously.

    I don’t blame the advisers working at these banks or building societies. I blame the management structures that put them under immense pressure. The people that should be in court are the managing director and board members who sanction these management structures, until this happens, nothing will change.

    http://essentialifa.wordpress.com/2010/11/18/chelsea-building-society-misleading-18-capital-protected-bond/

  9. The Banks rule in this country the Government are powerless to do anything, the FSA are just lapdogs. The financial crisis was created by Banks causing thousands to lose their homes in reposessions,they pay little in tax, and they are now shedding jobs by the thousand causing more heartache, and just when the ordinary bloke in the street needs financial advice they introduce RDR to finally put the final nail in the coffin of advice to the working class.

  10. Ged O'Neil Bell 13th June 2011 at 2:45 pm

    @Mike Jordan

    MM probably have intelligent banner advertising where the ads that are shown are relevant (if possible) to the content.

    This makes sense as it improves conversion rates.

    Simples

  11. The FSA have gone rather quite about their cosy relationship with the banks and the planned handover of IFA distribution to them. So quite in fact I think we aought to remind our readers of some basic facts.

    In 2007 the year before that banks rather let down their pals at the FSA and when the FSA was working away at RDR and how they could hand over distribution to the banks, Dr Thomas Huertas, FSA’s director, wholesale firms division, said that banks could be well placed to come up with a non-commission-based impartial advice regime suitable for the mass market. At the time I asked the following:

    You are reported as saying:

    ‘Commission-based distribution arrangements tend to lead to conflicts of interest and may result in mis-selling.’

    ‘You go on to say:

    “How do we solve this conundrum? We are genuinely interested in working with banks to find a way to do so.’

    ‘Two questions:

    ‘Can you support your view that commission based selling leads to a conflict of interest and mis-selling. I am unaware of any authoritative study that supports this proposition and if such a proposition is false then it should not form the basis of FSA policy.

    ‘Can you support your view that the track record of banks justifies their inclusion in any possible solution?

    In 2008 the banks collapsed on the FSA watch and the FSA was found to be asleep, and yet they still conspire to hand over IFA distribution to such an unworthy beneficiary – the banks.

  12. As the lady says ‘who else do you go to for advice but your bank ?’ That says everything about how the IFA industry promotes itself. Why are we paying fees to an industry body ?

    No surprises in the Panorama programme. Just as well she didn’t go to ‘Rats Nest’ for advice. You should see some of the porky pies I have heard told there. Why oh why are the public surprised about anything in this programme ? Why on earth the woman used a ‘claims handler’ is beyond me when she could have complained directly for free. Not the brightest customer in the first place !!!

  13. Well blow me over, I’m shocked!!!!!!!!!!!!!!

    Which soft t***t’s at the regulator seem intent on pushing every member of the public into the banks cluthes then?????????

    Look at the complaints figures and track record of the IFA sector, stacks up well dont you think. Thats probably why the regulator wants to kill it off!!!!
    Barclays have the best idea

  14. I hope the report is better constructed, presented and more accurately researched than the demolition job they did on pension plans a few months back. I’m all for highlighting problems but don’t sensationalise for the sake of “hard hitting TV journalism”.

  15. Roll on 8.30 I can hardly wait.I am already planning to postpone my 8.30 viewing of Coronation Street until 9.30 on channel 33,I do not want to miss one second of Panorama.

  16. Lets not celebrate the content of the programme until we have seen it.

    Unless there is a clear distinction between bank ‘advisers’ and financial advisers it will have the same negative effect on us.

  17. i’ve been in this industry for 30+ years, nothng has changed has it? Same old issues, what’s to be achived by this bank bashing, let’s focus on the good and promote it, educate the public – this sort of programme only fuels the fire as the general public think IFAs are the same as bank advisers after all!

  18. Thr RDR is going to drive a lot of smaller firms out of business especially in the North where earnings savings etc are lower. I have many client who will drop back into the banking system. How do I know that? I’ve asked them all it seems to me that more than the FSA have done. It isn’t a mess as most people think; as it is a pre-planned operation to force out the IFA sector. When we’re gone we’re gone for good.

  19. Even after the recent scandal at Barclays………. The Banks ain’t gonna change!

  20. Welcome to the future – yet a survey apparently told us that 92% of customers were ‘happy’ with their bank shortly after the credit crunch. As the saying goes, we get the Governments we deserve and all that goes with it.

  21. The programme could have been three or four times as long and some every useful input was left on the cutting room floor so that the banks could have their say.

  22. This is typical of the press and a programme like Panorama. They thrive on bad news and ignore any good news. I work for the Co-op Bank, we were praised in this report, but why didnt they show the good, ethical advice that we gave?

  23. Julian Stevens 14th June 2011 at 9:28 am

    What the programme demonstrated to me (as I’ve called for before) is the need for the FSA to stipulate that all recommendations must be set out in writing and submitted to the client to read at leisure at least a week before the presentation of any application forms. It simply isn’t good enough for the letter of recommendation to be provided after the investment cheque has been signed and the money invested because, even if the client exercises their right to cancel, they can lose some of their money as a result of a dip in unit prices. Clients should be given the opportunity to decide on the basis of written recommendations BEFORE they write a cheque whether or not they’re happy with the nature and costs of any recommended investment/s.

    Under the present system, once the money’s been invested, there’s an inevitable and probably large degree of apathy, along the lines of Oh well, it’s done now, it’ll probably be okay. As we can all readily recognise, such a methodology is decidedly unsound.

    The letters of rec. that I’ve seen produced by the banks are anything but client-specifically tailored. Rather, they’re little more than a cut-and-paste after-sale chore, very obviously put together by somebody other than the person who’s actually made the sale. That’s not advice, it’s just a stage in a compliance process to get the sale signed off.

    As for the cost of the claims advisor, one wonders just what he did and how much he charged for it. How long does it take to discuss with the client the basis of their grievance, look through the documentation supplied by the bank and draft a suitable letter of complaint? Two hours? Should that cost any more than £300, which isn’t peanuts but it isn’t a fortune either?

    And, if the FOS recognises that many complainants may well need to engage the services of a reputable claims advisor, shouldn’t the FOS awards system allow for a modicum of reasonable costs in that direction, particularly if the initial complaint has been fobbed off and subsequently upheld?

    The rules that the FSA should impose on how investments are sold seem to me pretty clear and straightforward. So why isn’t it implementing them?

  24. BANK & REGULATORS - BEST OF PALS 14th June 2011 at 4:50 pm

    In 2007 a year before the banks failed on the FSA watch Dr Huertas, as director of the wholesale firms division at the FSA, is reported as saying:

    ‘Commission-based distribution arrangements tend to lead to conflicts of interest and may result in mis-selling.”

    He goes on to say:

    “How do we solve this conundrum? We are genuinely interested in working with banks to find a way to do so.’

    This is the FSA mindset and why they failed to regulate banks and why they see RDR as a method of genuinely working with banks to hand over IFA distribution.

  25. Chris Wicks CFP 15th June 2011 at 10:25 am

    Panorama must have run out of new material to run. It is hardly ‘lifting the lid’ to suggest that bank advice is quite what it ought to be! I have seen a similar misdemeanor to the one committed by Santander at first hand with a relative who was conned into taking out wholly inapropriate investments for which the bank in question rejected the complaint. The issue is that they deal with a lot of vulnerable unsophisticated people and they are able to implement investments by simply getting them to sign a mandate that looks the same as what they would sign to create a new cash deposit account. I suspect that most are wholly unaware of what they have.

  26. How many bank customers have the courage to complain?

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