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"Which?" slams bank investment advice.


CliveH

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This comes as no surprise to me having over the years to sort out the mess on a huge number of occasions. Beats me why anyone thinks banks are a good source of advice??

 

........................

 

Which? slams banks for sub-standard investment advice

 

highlights of the article...

 

Only 4 out of 37 branches gave appropriate advice

33 recommended inappropriate products

21 firms gave 'blatantly inaccurate' advice

 

"Banks and building societies are continuing to provide inappropriate investment advice to the very consumers who bailed them out last year, a Which? investigation concludes.

 

An undercover probe found just four of 37 branches visited gave appropriate advice about investing a lump sum.

 

The remaining 33 recommended inappropriate products without explaining the risks. A total of 21 of the firms investigated gave "blatantly inaccurate" advice such as referring to capital guaranteed products as entailing "no risk".

 

Six tied advisers who suggested an investment bond also failed to properly explain the risks of the product.

 

Only one adviser suggested splitting savings between two institutions to avoid going over the £50,000 savers protection limit, while 14 advisers failed to mention the Financial Services Compensation Scheme (FSCS).

 

Which? chief executive Peter Vicary-Smith says: "It's disappointing to see yet more evidence that the way many banks treat their customers hasn't improved since our taxes were used to bail them out.

 

"Consumers are being convinced to take out high risk products that they simply don't understand."

 

"Banks and building societies need to buck up their ideas and make sure their sales practices don't exploit consumers by encouraging their staff to recommend inappropriate products."

 

......................................

 

Considering we bailed most of them out, I find their actions as reported by the Consumers Association totally unacceptable.

 

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So nothing much has changed since the late seventies when I first discoverd that the bank's 'financial advisors' were just a bunch of rogues selling whatever paid the highest commision - usually long term or whole life high sum assured life insurance policies!
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Tracker - 2010-03-24 10:13 AMSo nothing much has changed since the late seventies when I first discoverd that the bank's 'financial advisors' were just a bunch of rogues selling whatever paid the highest commision - usually long term or whole life high sum assured life insurance policies!

So, a bit like many independent financial advisers then? They don't always come out as saintly!

Choose yours very, very carefully!

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As an IFA I would agree with what you say Tom - chose who you take advice from very very carefully! - A personal recommendation is good, but putting a pin in the list of "Yellow Pages" is not a particularly good idea.

 

We only work on recommendations - and have never advertised. Those that do advertise in my mind cannot be that good in my book. Sadly - one bad apple………….!

 

As for what is best - I would suggest a good look at the Financial Ombudsman’s Service statistics as they show that of all the complaints they received last year only 3% were about IFA's and of that 3% - 20% of complaints were upheld.

 

In contrast 58% of all FOS complaints came from the High Street banks and of that 58%, over 70% of complaints were upheld.

 

http://www.ombudsman-complaints-data.org.uk/

 

I would also recommend everyone checks out an IFA via the FSA website. If you go on it and select "FSA Register" you can put in the name of the firm or individual and find out exactly what they are licensed to deal with and their history.

 

http://www.fsa.gov.uk/

 

There really is no need at all these days, with our being regulated by a government agency, for anyone NOT to be able to select an Adviser that is to the required standard.

 

If only we had the same facilities to select a Solicitor or a Doctor for example!

 

 

 

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The latest six month data from the FOS (Financial Ombudsman Service) make sobering reading – the number of complaints rocketed from 69,841 in the previous 6 months to 82,136 for the latest 6 month figures.

 

Lloyds toped the complaints table at over 20,000 complaints in the last 6 months with Barclays and RBS coming 2nd and 3rd with 10,892 and 7098 respectively.

 

In marked contrast “Sesame” one of the large IFA networks received just 98 complaints.

 

This is not a surprise because the banks have always been a “seller of products” rather than a source of true advice. Sadly I see the banks giving no indication at all that they will or even have a desire to change their ways because from my experience they just view complaints as part and parcel of “the process” and will continue to focus on writing “volume” regardless of what the customer of the bank actually needs.

 

 

(and yes BGD!! - how could i forget MP's!!! (lol) (lol) (lol) )

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GypsyTom - 2010-03-24 10:51 AM
Tracker - 2010-03-24 10:13 AMSo nothing much has changed since the late seventies when I first discoverd that the bank's 'financial advisors' were just a bunch of rogues selling whatever paid the highest commision - usually long term or whole life high sum assured life insurance policies!

So, a bit like many independent financial advisers then? They don't always come out as saintly!

Choose yours very, very carefully!

And check out the products yourself on the internet, there are loads of sites to do so. I was lucky the guy at my bank (HSBC) knew his stuff and got me into a couple of Bond funds that have gained £1900+ in the first month (60K invested).
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Presumably Corporate Bond Funds Peter?

 

I agree they are doing well now – one of my favourites is the one offered by M&G (owned by the Pru – so good financial strength.

 

See the Fact sheet from Trustnet:

 

http://www.trustnet.com/Tools/PDFViewer.aspx?url=%2FFactsheets%2FFundFactsheetPDF.aspx%3FfundCode%3DMGSHI%26univ%3DU

 

BUT! – also look at how flat the performance was between 2005 and early part of 2009. Reason for this is that these investments work well when interest rates are low. When rates climb their attractiveness and performance declines rapidly. So do watch out when the rates start to climb.

 

Problem I have is that the banks love to put all the eggs in one basket. And the flavour of the month for banks is these Corporate Bonds because they are in what is known as the “Fixed Interest” sector which does NOT mean they are like Fixed Interest Bank accounts!

 

In fact Barclays was heavily criticised recently for selling these “Bond” funds without setting out the true risk. One of the funds Barclays focussed on was the Aviva Global Income fund

 

http://www.trustnet.com/Tools/PDFViewer.aspx?url=%2FFactsheets%2FFundFactsheetPDF.aspx%3FfundCode%3DD8F95%26univ%3DU

 

Not a bad fund – but should be part of an overall strategy – not the only game in town as Barclays were guilty of using it.

 

Peter – if you were recommended just one fund or one sector for the whole lot! – I would be concerned and I would recommend you be prepared to bail out into other funds at short notice.

 

But check for penalties! The banks love those.

 

Check your fund(s) out via the website “Trustnet” – this is a fantastic site – once you have the fund up – click on the pdf link and you can save the factsheet how you want.

 

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Thanks for the info' Clive.I am in Invesco Monthly Income Plus (Gross Acc) to the tune of 6K and the rest is with Fidelity Strategic Bond Fund (net inc). The 6K is wrapped in an ISA, and will wrap 20,400 more of it this week to take advantage of next years joint allowance.

What do you think of these funds, they seem to be doing o/k at the moment, or is there something better? Will have a look at the trustnet site.

Peter

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Yes the case of the "Kidnapped German IFA" is here:-

 

http://news.bbc.co.uk/1/hi/8583273.stm

 

And once again it is all about eggs in baskets.

 

a) the Investors were daft to place circa £2Million offshore and in the USA to boot.

 

b) the German IFA should be investigated for recommending it,

 

The story states that they went through the courts but did not get anywhere.

 

My advice? - If you are lucky enough to have £2M to invest - do not put it all into one sector (US Property in this case) and do not put it in a country outside of the EU so that your own countries Investor Protection legislation AND the Investor Protection legislation of the EU cannot help you if it all goes pear-shaped.

 

I used to despair at the journalists who used to write about how wonderful "IceSave" was because it gave a tad more interest - but even back in the February before the collapse of the Icelandic Banks we IFA's were being warned that the Icelandic Banking system was in a mess.

 

http://www.efinancialnews.com/story/2008-07-28/storm-clouds-over-icelandic-banks

 

Here savers were VERY lucky that the EU and the UK stepped in.

 

What hope had these German pensioners that their investment was in any way protected by their own country or the EU when they placed £Millions in the property market of a foreign country?

 

Sometimes I feel it the individuals greed as much as anything else that gets people into such financial trouble.

 

I think these German pensioners would have had better luck invading Poland (lol)

 

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Hi Peter

 

Have a look at the Trustnet Factsheets:-

 

http://www.trustnet.com/Tools/PDFViewer.aspx?url=%2FFactsheets%2FFundFactsheetPDF.aspx%3FfundCode%3DPPIPF%26univ%3DU

 

http://www.trustnet.com/Tools/PDFViewer.aspx?url=%2FFactsheets%2FFundFactsheetPDF.aspx%3FfundCode%3DF2F58%26univ%3DU

 

The Invesco fund in particular is worth looking at in that the graph clearly shows that the fund can go down as well as up.

 

The Fidelity fund is more like the M&G one I mentioned before in that it is less volatile.

 

BUT this sector is subject to fluctuations and will fall if Sterling comes under pressure because our debt burden is too high.

 

My recommendation is to be prepared to get out fast if you have all your eggs in this basket.

 

I also suggest you hang onto the factsheets - PRINT THEM! - and check exactly what the bank has put in writing re these funds. If their Investment Report to you talks about "Fixed interest" but does not point out that this sector should not be confused with a "Fixed Interest Account" then if it does go pearshaped you have the evidence that they glossed over the volatility of these funds.

 

However, if you have stated that you are not adverse to "risk" then these funds are OK.

 

My concern is that in order to get a sale - the banks are using the "Fixed Interest" sector wrongly.

 

It is a good sector - but not on its own and not without the investor being told the capital value can go down as well as up.

 

 

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