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BLOG: Don’t bank on good investment advice

Steve Bloor
Written By:
Steve Bloor
Posted:
Updated:
10/12/2014

Steve Bloor from financial complaints firm Open Resolution warns consumers to remain alert when taking investment advice.

The Financial Services Authority (FSA) have published the results of a mystery shopping exercise it has undertaken into investment advice given by the major high street banks and the results make for pretty stark reading.

The FSA had questions about the suitability of the advice in 25% of cases it looked at and also found problems with the lack of disclosure of required information in 42% of cases.

If press reports are to be believed, as a consequence of the findings, the FSA may be taking enforcement action against Santander (though both parties have declined to comment on this so far).

The problems identified by the FSA were pretty wide ranging – bank salesmen recommending products that are inconsistent with customers’ attitudes to risk, failing to recommend that customers repay expensive debt such as credit cards before investing, mis-matches between the term of the investment and the length of time over which the customer wished to invest, poor questioning about customers’ circumstances and requirements and advice that was clearly biased towards products paying higher commissions and bonuses. A number of the banks are now undertaking reviews of past investment business.

The banks, I’m sure, will put a positive spin on this pointing out that in 75% of cases the advice was suitable but, bearing in mind these types of products have been regulated since 1988, it’s a real concern that, 25 years later, such fundamental flaws are still being found in a high proportion of cases.

Steve Bloor is managing director of www.openresolution.co.uk, specialists in resolving consumer disputes related to financial products and services.