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Which? fails 90% of banks on advice

Almost 90 per cent of banks and building societies gave inappropriate financial advice on how to invest a lump sum to mystery shoppers from Which?, in an undercover investigation.

Which? researchers found just four of 37 branches gave good advice, while the remaining 33, or 89 per cent, recommended “inappropriate products without properly explaining the risks”, or failed to get even the “basics of good advice” right.

Which? says Lloyds TSB and Halifax performed no better than the rest, despite being bailed out with taxpayers’ money.

The investigation shows 21 of the 37 advisers recommended that the researchers put some of their money into capital-guaranteed products, with eight touting these plans as “no risk”.  

Six advisers suggested an investment bond, failing to adequately explain the risks of the product.

Fourteen advisers failed to mention the Financial Services Compensation Scheme at all, with only one advising the researcher to split their savings between two institutions to avoid going over the £50,000 limit.

Which? chief executive Peter Vicary-Smith says: “It is disappointing to see yet more evidence that the way many banks treat their customers hasn’t improved since our taxes were used to bail them out.  Our research shows that consumers are being convinced to take out high risk products that they simply don’t understand.

“Banks and building societies need to make sure that their sales practices don’t exploit consumers by encouraging their staff to recommend inappropriate products.”

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Comments

There are 9 comments at the moment, we would love to hear your opinion too.

  1. Thankfully I'm Out Of It 24th March 2010 at 9:40 am

    Having worked in bancassurance, the pressure to hit monthly sales targets, with daily reporting, is unbelievable. One month you can be flavour of the month, the next you can be on a Performance Improvement Plan which is the first step to manage you out! Its conveyor belt sales not advice, with you being targetted to see 5/6 people per day. How can you give customers quality holistic financial advice under these circumstances?

    Nothing will change until the people who set the targets change. I, for one, will not be holding my breath!

  2. A Tory adviser on the future of regulation said:

    I don’t want to get in a protracted argument about this. I entirely agree that banks bear a huge part of the blame. My point is that IFAs hold themselves out to be something better than banks – i.e. “independent” and “expert’ – those are the standards that some of the IFA fraternity have failed to live up to.

    This is a former BofE head of supervison and former MD at the FSA… He uses the word ‘some’ to paint all IFAs with the same brush, is it because be is a biased banker? No balance?

    What hope is there?

    These are supposed to be intelligent adults yet they get their backs up because some IFAs take pot shots at the bankers who mess people’s lives up with impunity.

    Come on Hector, grab your staff by the collar, drag them into an office and let me educate them on the ways of the real world.

    Having seen what is being repeated by the Tory ‘think tank’ I can’t see any hope of radical change in regulation. But they have been offered the opportunity to change our lives for the good, the problem lies with listening to the likes of the man I mentioned above and simply recycling regulation yet again.

  3. Anyone who has been at the financial services workface for more than a year or two has known about the almost criminal neglect and incompetence of the banks when dispensing advice to the public.

    Yet the FSA (the consumers’ champion – ha,ha) continues its onslaught against competent and honest IFAs knowing that the end result will be that independent advice will become a thing of the past for ordinary individuals and the banks will then be the only port of call for Joe Bloggs needing guidance on his personal finances.

    A bunch of idiots serving the interests of cheats and fraudsters – that’s the depressing picture of financial services regulation as it stands today.

  4. I’m not sure what Peter Vicary-Smith was expecting…

    Did he really think that as the Banks had received a bail out, that they would alter their sales processes? Seems a little naive to me.

    It seems an absolute disgrace that there is only a 10% chance of receiving the correct advice if I pop into my local branch.

  5. “A former senior director of banking giant HBOS has told how a “supermarket-type” sales culture had led to the near collapse of the bank.

    Paul Moore, who was head of regulatory risk at the bank between 2002 and 2004, claimed that there were early concerns as to whether the business was under control as a premier sales and marketing culture was promoted throughout the company

    It’s the sales culture and the greed of the managers that’s to blame. Why don’t the FSA introduce a regime where advisers have to treat customers fairly? They could call it TFC?
    RDR my a***e… to quote Ricky Tomlinson.

  6. Here’s an interesting paradox. The FSA is charged with protecting the interests of consumers ~ its Number One priority, so we’re told.

    The banks continue to get away with target-driven sales practices for which the FSA would (and already has several times) come down on any IFA firm like a ton of hot bricks. The FSA basically, deliberately looks the other way. We know this because Adair Turner has admitted that this is what it had been told by the Treasury to do.

    The most respected consumer-champion magazine produces a report that is about as damning of bank sales practices as any could possibly be. This is addition to countless reports from other sources of such practices.

    Hector Sants issues some lukewarm, watery statement to the effect that IF the FSA finds evidence of bad practice at the banks (whilst everyone else is all but falling over them), it might look into them, but that any changes of culture have to be managed within what the industry can realistically cope with.

    Meanwhile, the FSA continues to dish out one financial drubbing after another to IFA firms, the hindsight reviews continue (as do the bonuses and regular pay rises) and objections from much of the IFA sector to the viability or practical value of the RDR go largely unheeded.

    Do we live in a world of fairness and justice? No we do not. The FSA gives the the banks an easy ride every step of the way whilst at the same time persecuting and hounding IFA’s to the brink of extinction.

  7. Which? fails 90% of banks on advice!

    Oh dear another nail in the pro banking FSA RDR policy – but will it stop the FSA?

    Now let’s go down memory lane – lest we forget.

    In 2007 (before the banks dropped the FSA in it) Dr Thomas Huertas Director Wholesale Firms Division FSA said that:

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

    And he went on to say that the banks were the solution:

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

    I took issue with Dr Huertas on these two questions:

    I did not believe he could support the view that commission based selling leads to a conflict of interest and mis-selling. I was 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 RDR policy.

    Dr Huertas was unable to support his view with evidence and all he could say was that his view was “logical” but I repeat he was unable give me any authoritative study or basis for such a view! I pointed out to Dr Huertas that IFA’s are already obliged to offer either a fee basis or a commission driven basis of remuneration.

    I took issue with Dr Huertas view that the track record of banks justifies their inclusion in any possible solution? I suggested that his focus on banks as a solution is unwarranted in light of their historical record. Banks have profited from captive clients, lack of consumer choice and the sale of substandard products via tied sales forces. The Dr seemed to ignore the fact that banks have also been shown to be incompetent and responsible for many of the problem that afflict our industry – mis-selling and expensive methods of distribution to name but two.

    THIS WAS OF COURSE BEFORE THE BANKS AND THEIR LACK OF FSA REGULATION PLUNGED THE UK INTO RECORD DEBT & YET STILL THE FSA WANT TO HAND OVER IFA DISTRIBUTION TO THEIR FRIENDS AT THE BANKS

    Simon Mansell
    Temple Bar IFA

  8. Is it simply a case of shutting up IFAs and extricaing compensation without quibble?

    Do the banks pay up without quibble? How many bank customers have the courage to complain and out of those who are brave enough how many have to go all the way to the FOS?

    It is unfortunate that the regulators who are mostly bankers see these public displays of outright condemnation as unwarranted, as a personal affront, as an excuse to squeeze IFAs until the pips squeak because they are seen to have ‘serious issues’ with regulation.

    It is not regulation which causese us grief, it the way it is applied dispropotionately.

    We need balance, I still see none.

  9. Is it simply a case of shutting up IFAs and extricaing compensation without quibble?

    Do the banks pay up without quibble? How many bank customers have the courage to complain and out of those who are brave enough how many have to go all the way to the FOS?

    It is unfortunate that the regulators who are mostly bankers see these public displays of outright condemnation as unwarranted, as a personal affront, as an excuse to squeeze IFAs until the pips squeak because they are seen to have ‘serious issues’ with regulation.

    It is not regulation which causese us grief, it the way it is applied dispropotionately.

    We need balance, I still see none.

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