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Page last updated at 09:13 GMT, Monday, 13 June 2011 10:13 UK
Putting high street banks' financial advice to the test


After the bailouts, the bonuses and the multi-million pound fines for mis-selling products, Britain banks say they have cleaned house and are working hard to rebuild reputations and regain customers' trust. As Panorama's Penny Haslam reports, it is an uphill battle.

We are used to hearing about borrowers paying high interest rates, or businesses struggling to get access to credit or overdrawn current account customers facing high fees and charges.

There are around 35 million savers and investors in Britain and with interest rates on savings accounts at rock bottom and inflation eating into the real value of your money there is a lot of pressure to find a better deal for that hard earned cash.

For many, going to your high street bank for advice seems a logical starting point.

Heather Adams took early retirement from her job in a post room five years ago.

She went to her bank, which was then Abbey National - now Santander - for advice on how best to invest her £11,000 pension pot.

I don't go to the doctors and say can you give me a lethal disease, I don't go to the bank and say can you lose all my money
Tony Adams, investor

She said she asked the bank's advisor to ensure that the money was safe as it was her nest egg. But within six months her money had halved.

"It sounds stupid but I trusted the bank's advisor to do the best thing for me. We had built up a good rapport and I really felt that he was interested in helping me," she said of her initial decision.

Worried she would end up losing it all, she decided to cut her losses and get back what she could, about £5,000.

Santander turned down Mrs Adams complaint of mis-selling but she took it to the Financial Ombudsman Service who ruled in her favour and ordered the bank to refund her a further £5,000 plus interest. But, after paying a firm that helped with her claim, she was still out of pocket.

Over-eager staff

With fines for banks topping the millions of pounds for mis-selling investment products, Mrs Adams case is not uncommon. Her husband, Tony, was also the victim of mis-selling by a different bank.

Mr Adams had gone to Barclays for help with his pension lump sum and also found himself out of pocket. They sold him a product that the bank has now been fined £7.7m for advising customers to invest in.

Penny Haslam
Penny Haslam met investors who saw their pension monies halved

In just under two years, Mr Adams' money had also halved. He went to his branch and spoke to an advisor.

"He told me that the way it was going, I was probably not going to have any money left. It appeared to me that I was paying them an annual management charge to lose my money."

He is adamant he was clear from the start that he wanted to keep his money safe.

"I don't go to the doctors and say can you give me a lethal disease, I don't go to the bank and say can you lose all my money."

Mr Adams also went to the Financial Ombudsman Service and they ruled in his favour. But, like his wife, after paying an advisor to help with his claim, he too is out of pocket because of the bank's mistake.

Barclays has now stopped offering in-house advice, but others still do.

James Daley at the consumer organisation Which? is concerned about over-eager sales staff in branches who are given incentives to push investment products that bolster the banks' profits, rather than suit the customers.

"Banks don't make any money on selling savings accounts, but they can make quite a lot of money by selling investment products."

'Inaccurate, misleading'

Panorama used two mystery shoppers to go undercover to gain a snap shot of in-house advisors at work.

HSBC signage
HSBC's advisor drew criticism from Panorama's financial expert

Both had the same story - they were recently retired with £90,000 to invest and were looking for advice. Both made it clear they were cautious with their cash.

Independent financial experts Louise Oliver and Adrian Lowcock then reviewed the secret camera footage to assess the advice on offer.

Although none of our filmed bank advisors broke Financial Services Authority (FSA) rules, they came close on a few occasions, overstepping key principles laid down by the industry watchdog about treating customers fairly.

The rules say banks must be clear about fees and charges, but the Lloyds TSB advisor rushed through what you might have to pay and another bank suggested that you would not notice the fees.

Adrian Lowcock from Bestinvest said inexperienced investors would struggle to keep up with the pace and might fail to understand what you would be paying.

The same advisor told our undercover reporter that Lloyds TSB was offering market leading set up charges on the high street.

Our financial expert Louise Oliver, said: "It's inaccurate, it is misleading and it is building up the credibility of that particular solution for the client - the reason the advisor is probably doing it is because he knows that person is shopping around."

Lloyds TSB responded: "If our advisor has described our charges as market leading then he has not met our expectations."

Another area that our experts noticed was the way advisors assessed the risk profile of our investors. They said this is the most important thing for the banks to get right and most of the banks did.

However, at HSBC, an advisor suggested to the customer that he could tell by looking in her eyes what sort of risk she could take.

"Unless he's Derren Brown I'm pretty sure he can't," said expert Louise Oliver.

This advisor failed to fill out the risk questionnaire until the end of the second meeting with our mystery shopper. HSBC said:

Barclays cash machine
Barclays has stopped offering investment advice

"Although the issues raised by Panorama are the result of the advisory process not running to its natural conclusion, we have taken on board the issues raised and will use them to ensure we continue to offer the best possible service to our customers.'

Eric Leenders, head of the British Bankers' Association, said he believes there are appropriate checks and balances in place to protect investors and savers.

But financial advisor Louise Oliver thinks it is time that banks rethink how they give advice to the public.

"The problem probably is they are seeing too many clients a day - they need to slow that whole process down, if that leads to less product sales all the better, it will lead to fewer fines (for the banks) in the end."

Panorama: Can You Trust Your Bank? BBC One, Monday, 13 June at 2030BST and this available in the UK on the BBC iPlayer.

Fresh bank rules come into force
Sunday, 1 November 2009, 12:32 GMT |  Business


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