News that the Financial Services Authority (FSA) found that the quality of the investment advice given by banks and building societies is generally poor should encourage would be investors to ask the professionals.
The FSA carried out a mystery shopping exercise in March last year and found that the investment advice given by banks and building societies was “poor” and at times misleading in one in four cases. This meant that customers could be “at risk of suffering detriment” if they were recommended unsuitable products.
In a total of 231 “mystery shops”, undercover FSA “customers” asked for advice on what to do with a lump sum and in 15 per cent of cases advisers made “misleading statements”, typically about the potential risks and performance of products.
In addition, the FSA said the results showed that in 11 per cent of cases the evidence suggested the adviser gave the customer unsuitable advice, and in a further 15 per cent of cases the bank or building society employee did not gather enough information to make sure their advice was suitable, so it was not possible to assess whether the customer received good or bad advice. The FSA said both of these constituted poor advice.
So bad was the report in the case of Santander that it is facing a fine by the regulator and has suspended its face-to-face investment advice service until further notice while launching a strategic review of the division.
The FSA has said that it was disappointed by the findings, particularly in the wake of scandals and clampdowns involving the mis-selling of products such as payment protection insurance and interest rate swaps.
If you would like to discuss an investment further, come and speak to myself or a member of the Milsted Langdon team. We’re always on hand to offer impartial, honest and friendly advice, to help you achieve your financial goals.
Steve Horton is a Chartered Accountant and a Chartered Financial Planner who specialises in helping clients to manage their pensions and investments