High Street Banks offering poor Investment advice

Financial investment advice is available through banks and independent advisors




8:34am UK, Wednesday November 16, 2011





High street banks are offering poor investment advice and
recommending inappropriate financial products to consumers, according to
an undercover investigation.


The consumer campaigning charity Which? sent nine researchers - all
aged above 60 and posing as retired savers inexperienced at investing -
to get financial advice at bank and building society branches across the
UK.


The study found that 32 out of 37 advisers made misleading statements
about available investment products and appeared not to have a good
understanding of the financial risks involved.


Many of the bank employees recommended complicated financial
products, with hefty fees to pull money out in the short term, which are
considered inappropriate for the average investor near retirement age.


Even though financial institutions earn commission on the products
they recommend, nearly half of the advisers said there was no cost for
their advice.


One of the undercover researchers was told by an employee at
Yorkshire Bank, a subsidiary of Clydesdale Bank, to invest £50,000 in a
bond without disclosing that this would net the bank £4,400 in
commission.


Almost half also failed to mention the Financial Services
Compensation Scheme (FSCS), and many made mistakes about the level of
protection available.


The FSCS is an independent fund which guarantees UK bank and building
society deposits up to £85,000 per institution, but the upper limit for
cover on investments is £50,000, a distinction that one Santander
adviser did not know.


Despite the failure of numerous banks in recent years, a financial
adviser at NatWest even said: "Let's face it, the major banks aren't
going to go under, " while handing the researcher a leaflet about the
FSCS but adding: "You don't have to read this".


Earlier in the year, two of Britain's biggest banks, Barclays and RBS, were reprimanded for mis-selling financial products.


Meanwhile , the same study also tested six independent financial
advisors, not tied to a high-street bank, and found their performance
much more reassuring.


Four out of the six carried out thorough research and took into
account the investor's attitude to risk before recommending products,
and disclosed commission arrangements and fully explained costs, risks
and compensation.


The charity's executive director Richard Lloyd said: "It's shocking to see such low standards.


"It's also disappointing to see that things haven't improved in the
past year, despite two high street banks being fined for advice failings
and poor complaints handling."


Which? said it would urge the Financial Services Authority (FSA), to
investigate the issue further as well as talking to the institutions
themselves.


The industry regulator already plans to enforce its Retail
Distribution Review at the end of 2012, which will require financial
advisers to disclose commission and any associations with specific
firms.

there was an article today in guardian,some employees see clients as muppets.

Badboy wrote:there was an article today in guardian,some employees see clients as muppets.

It's that American Guy who just resigned as CEO of Goldman Sachs and wrote an open letter published about the corruption at GS and Clients called
Muppets'.