Which? - the UK consumer watchdog - has discoved that High Street banks are providing 'shockingly' poor investing advice to inexperienced older savers - with nine in ten High Street bank advisers failing an undercover investigation.
As reported in a recent article in This is Money, bank staff made 'misleading statements', tipped overly risky and 'inappropriate' products, and even lied to researchers about charges. Which? also said one in three independent financial advisers failed its standards for 'good' advice, although the sample was much smaller.
'Good' advice was defined as including full disclosure of commission-earning products, savings protection coverage, and fully explaining the right level of risk for each customer and being clear on charges. Just five of the 37 advisers surveyed were classed as giving 'good' advice.
Examples of poor or plain bad advice included:
- recommending complex and high-cost bonds
- proposing products with exit fees of up to 12% (if the customer wanted his or her money early)
- claiming there was 'no cost' for the advice, despite receiving commission for selling the products (the worst case was an investment of £50,000 in a bond that would result in more than £4,400 in commission)
- claiming that investments were covered up to £85,000 - which is actually the savings compensation limit - rather than £50,000 - which is the investment limit - by the Financial Services Compensation Scheme (FSCS)
- Half the bank advisers failed to mention the FSCS in any shape or form.
So, yet another study underlining the need to inform yourself and make decisions that benefit you rather than the guy (or girl) in a suit.
I am not a financial advisor and the information provided does not constitute financial advice. You should always do your own research on top of what you learn here to ensure that it's right for your specific circumstances.