Brokers and those in the intermediary world have long called on banks to end the pretence that they offer advice.
This question of whether banks’ in-house advisers are nothing more than glorified salespeople was put in the spotlight by BBC One’s Panorama series last week.
The programme, Can You Trust Your Bank?, focussed on whether in-house advisers in banks are more concerned with lining their pockets with commission than offering customers the best advice I’m sure you can guess what the conclusion was.
The show focussed primarily on the sale of investment products, but could not resist mentioning the payment protection insurance scandal.
With complaints about the mis-selling of financial products at an all-time high, the programme didn’t need to go far to find victims.
It also carried out its own research and sent undercover reporters to some of the top banks, such as Lloyds Banking Group, Santander, the Royal Bank of Scotland and HSBC.
The reporters found examples of potential mis-selling at the banks but they were not too shocking. Perhaps the programme should have tried a bit harder to find some better cases.
One example shown was an in-house adviser claiming its products were market-leading when, shock horror, they weren’t. But it was stressed that the programme was not intended to be a scientific exercise, just a snapshot of the advice on offer in banks.
In many ways the financial adviser and broker sector could not have asked for better PR.
The presenter, financial journalist Penny Haslam, used the expertise of financial advisers to comment on the behaviour of in-house advisers. And it wasn’t before long she asked the million dollar question “Should in-house advisers call themselves advisers?”.
To those working in the financial services industry it is well known that in-house advisers only offer advice on their own products, so therefore can never be offering true advice. But for many viewers this would have been an eye-opener.
Banks were painted as money-hungry and unscrupulous and the programme showed an array of pensioners who had lost thousands of pounds by not knowing what type of investment deal they had signed up to. Unfortunately, they used claims firms to recoup some of their money, so lost even more, which the show did not really pick up on.
Can You Trust Your Bank? seemed to jump from one point to the next without ever addressing some of the issues in depth.
For example, it asked whether banks should be offering advised sales but failed to debate this much further, being satisfied with a half-hearted response from the British Bankers’ Association.
While the programme will not have done any harm to the reputation of IFAs it would have been better if it had separated the advice on offer in-house from that given by an independent adviser. But with a 30-minute time slot this was difficult.
It made a strong case for the Financial Services Authority to intervene in the design of products before it is too late, which was perfectly timed as it coincided with the release of FSA’s paper on product innovation.
To anyone working in financial services the programme will not have been a huge revelation, but for the public no doubt elements of it would have proved shocking.
Review by Natalie Thomas