Which? report criticises quality of financial advice from banks


A new report from the consumer group, Which?, has criticised banks and building societies for giving poor financial advice to 32 out of its 37 mystery shoppers.

The report also concluded that financial advice should be sought from an Independent Financial Adviser (IFA).

Mystery shoppers

Which? carried out the mystery shopping exercise in September and October, visiting 37 banks and building societies where they found that only five gave good advice.

In contrast four out of six firms of IFAs visited gave good advice,

When assessing the quality of the advice Which? considered areas such as, whether the adviser disclosed their tied status, whether the Financial Services Compensation Scheme (FSCS) was explained, and whether a thorough fact finding process was undertaken to establish the circumstances and requirements of the mystery shopper.

Importantly attitude to investment risk was also a key criteria used in determining whether the advice given was acceptable.

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Finally Which? looked at whether the product recommended was explained clearly with fees and charges discussed.


Both the Yorkshire Bank and Clydesdale failed on all of the four visits made to their branches, the Co-Operative and Britannia were not much better failing three out of four visits. There was also a pattern of the advisers at these banks, who were all tied to AXA, recommending Investment Bonds rather than potentially more tax efficient ISAs (Individual Savings Accounts).

The advice was also marketed as ‘free’ despite a commission of 8.8% being paid if the investment had proceeded.

A number of other banks and building societies, including Skipton Building Society, Royal Bank of Scotland and Lloyds, also failed to give good advice on all four occasions they were tested.

Independent Financial Advice

In contrast four out of six IFAs were deemed by Which? to have given good advice, with their status clearly disclosed and a clear explanation over charges.

The two IFAs who were deemed to have given poor advice did not correctly evaluate the mystery shopper’s attitude to risk and therefore recommended inappropriate products.

Richard Lloyd executive director of Which?Executive director  of Which?, Richard Lloyd (left) 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. It’s also disappointing to see that things haven’t improved in the past year, despite two high street banks being fined for advice failings and poor complaints handling.”

Lloyd continued: “We are reporting our findings to the Financial Services Authority and urging the regulator to investigate and punish the worst offenders. We want the FSA’s Retail Distribution Review to force banks and building societies to be more upfront about the cost of their advice. We will also be talking to the banks and building societies about improving their standards”

“Our investigation shows that the high street is not the best place to go for investment advice. If in doubt consumers should always talk to an IFA.”

If you feel as though you have been given poor advice by a bank or building society we are here to help. Simply contact one of our team of Independent Financial Advisers on 0115 933 8433 or email info@investmentsense.co.uk, they will be pleased to help you.