Banks misleading investors - again

Have you ever had decent advice from your bank about where to invest? Personally I'll never forget an early experience as a teenager, taking a printout of a comparison table to a bank and asking why they were recommending a rubbish savings account when there were so many better ones available at the click of the mouse. The response of the 'expert professional' was to peer closely at the printout and say "what's that?"

Of course I'm showing my age, but a new investigation has revealed that things haven't got any better, and in some cases it is costing customers thousands of pounds.

The revelations come from a BBC investigation. It sent undercover reporters into banks to pose as investors, and the advice they were given was often shocking.

One Royal Bank of Scotland adviser wrongly told a customer that if they followed their advice on how to invest £50,000 they "could not lose". Another from Lloyds TSB was befuddled (and befuddling) when asked about annual fees on an investment.

They were also quick to put pressure on customers to act fast - before markets went up and they missed out on the gains.

Part of the issue is that these 'advisers' are paid commission for winning investors to the bank's products. They aren't paid anything if they tell the customer to opt for a savings account or to go elsewhere.

Given that they only recommend products from that specific bank, this raises the question of whether we should be seeking advice from them at all.

Better approaches
If you want truly independent advice from someone who only stands to gain from giving you the best possible advice and having you return to them again and again as a trusted and respected expert, then your only option is a fee-based financial adviser. This will cost you initially, but it's the only way to be sure that you're getting unbiased advice.

Alternatively, if you don't want to pay, you need to get to grips with these things on your own. Read up on investments, what they are, what they cost and what the risks are. Then you can invest through a discount broker without any costs and without the feeling you're being ripped off.

The approach you take is entirely up to you, but clearly if you try to opt for a middle way by going to a bank in the hope you'll get free, unbiased, expert advice, you're in for a rude shock, and it could end up costing you dear.

Of course, British Bankers' Association spokesman Eric Leenders argued that bank advisers "give a lot of financial advice and support to people who perhaps are not quite confident enough to step into the market on their own." But then he would say that wouldn't he?

So what do you think? Do you trust a bank with your investments, and why? let us know in the comments.

Related stories
Read Full Story