Why aren’t high street banks giving better advice?
Our latest investigation into the investment advice given by high street banks and building societies has uncovered widespread failings. Have you been given risky financial advice in your local bank branch?
We’re living in tough times. The crisis in the Eurozone has seen the stock markets jump up and down viciously. And inflation, while having fallen yesterday, is still at such a height that savers aren’t getting a real return on their money.
Many find themselves turning to investments to try and beat inflation, especially older people on fixed incomes where the scourge of inflation has such a devastating effect. And getting the right advice if they do decide to take this step is vital.
However, our latest undercover investigation has found that going to a high street bank or building society for this is likely to leave you with less than a decent outcome.
Risky investment advice
We investigated the quality of advice in 37 bank and building society branches and found that only five advisers gave good advice.
We found advisers recommending inappropriate products to our elderly and inexperienced undercover researchers, poor assessment of how much risk they should take and misleading information about how advice was paid for.
We saw evidence of advisers selling products that would net their employers huge levels of commission, which were completely disproportionate to the service being provided. Pressuring advisers to meet commission targets is bound to lead to misselling.
It’s disappointing to see this poor practice continuing on the high street. We carried out a similar investigation two years ago, and only four advisers managed to pass our tests. Despite two major banks being fined in 2011 for misselling and poor complaints handling, banks still haven’t upped their game.
Our challenge to the banks
If you’re going to commit a significant amount of your wealth to investments, banks need to give you advice that will deliver a good outcome for you, not them. There needs to be a shift in culture where the customer’s needs come first, and not the bottom line of the bank.
The challenge is out there for banks to improve their practices. If we investigate them again in a couple of years time, we want to see their pass rate rocket.
Banks get a lot of stick, but we’re really waiting for the day when we can publish a story about the great advice customers can get in their bank branch. Let’s hope it’s not too far off.
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richard
Switch to First Direct – excellent advice given by humans – usually 24 hours a day – If the “teller” doesn’t know the answer they put you in touch with the area of the bank that does. So much better than what was the Midland bank (Yes I know it is technically the same HSBC bank) but the service is superb..
Richard
It’s simply, don’t use a bank. Banks sell products badly and don’t do bespoke financial planning
annie d
My husband died when my kids were 11 and 12. We had just moved back to the UK, after years overseas. When he died, we were living in rented accomodation. So I bought a house. What was left, had to provide an income in order to feed us, and pay bills, whilst I set up my business, and it slowly built up. We are still totally reliant on the investments, and are just watching them disappear before our eyes. I work about 30 hours a week, but do so much training, and buying of equipment that there isn’t much left yet from the business. It will never make even £20k a year, at best. The banks just don’t get it. I don’t have a big fat salary/ pension which will take care of us, if the Stock market nose dives. I have lost £50k on two investments alone, and have taken less and less from them. I moved everything over to a private financial advisor, who told me that one investment policy sold to me by the banks was notoriously awful, and they never chose it. So why did the bank. Comission. The top bankers get paid more and more, in bonuses. The rest of us normal folk get poorer and poorer. What do they have to do to earn these bonuses? Get us poor b******* to invest in unsound investments.
Richard
Annie d that’s terrible and please, please make sure your adviser is making things crystal clear and discussing with you your attitude to risk and capacity for loss. How does your adviser get paid and do you understand what you have and how it works? Is your adviser picking funds for you? Is he qualified to do this? Will he/she be around in Jan 2013 when the retail distribution review kicks in?
I hate seeing people getting shafted!!
jontycampbell
“Why aren’t high street banks giving better advice?”
For the reason that banks are not your friend – banks are not charities – they are a business, like any other, whose remit is to sell you products and services, whether you benefit from it or not. Banks will sell products that benefit their business before it benefits their customer, if they didn’t, they would not stay in business.
Let’s not be romantic or naive about this.