Which? undercover investigation finds banks give bad advice

Wednesday, 16 November 2011 10:54

An undercover investigation by the consumer organisation Which? has revealed that many banks are giving bad or unsuitable advice to their customers.

It sent nine researchers aged between 60 and 90 years to various branches of high street banks and building societies in Britain and found that only five offered good advice about investments.

Many appeared not to properly understand the products they sold, while others made misleading statements about their costs and benefits.

For example, 17 recommended investment bonds, even though these are generally not viewed as suitable for those approaching retirement age and have high exit fees if the money is required within five years.

Almost half of the financial services providers surveyed did not mention the Financial Services Compensation Scheme and 18 declined to disclose the fact that they receive commission on products sold through recommendations.

Furthermore, others made mistakes about levels of cover offered.

This comes after Barclays was fined £7.7 million by the Financial Services Authority in January for mis-selling unsuitable products, while Bank of Scotland was also ordered to pay £3.5 million for the same offence and for its handling of complaints.

Which? executive director Richard Lloyd said: "Now, more than ever, consumers need advice they can trust on what to do with their money. It's shocking to see such low standards. We are reporting our findings to the Financial Services Authority and urging the regulator to investigate and punish the worst offenders."

In contrast, four out of six of the independent financial advisers tested gave good advice to the undercover researchers.

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