Financial advisers are failing to give sound advice, says Which?

Financial advisers are failing to give sound advice, says Which?

Two-thirds of financial advisers are failing to give sound advice, according to the consumer body Which? Bank and building society advisers, who are usually "tied" to a limited range of products, were rated lowest in the Which? magazine survey published today.

The group sent 10 anonymous researchers to 57 financial advisers in England and Wales, of which 25 were tied and 32 were independent. They asked for advice about saving for retirement and protecting their income in case of ill health.

Nearly half of the 25 tied advisers misled researchers into thinking they offered a greater choice of financial products than they in fact did. Overall, independent financial advisers performed better, but many of them still fell short. Only 15 of the advisers were found to have met all the criteria to be deemed "good".

Which? said 30% of advisers broke Financial Services Authority regulations by failing to provide a key facts document, while more than 80% then failed to explain what it was for. Some advisers tried to put the researchers off reading it.

Advisers at Bradford & Bingley and HSBC selling protection insurance told researchers they were free to choose who they used, while in both cases they could offer only one product.

NatWest, Yorkshire Bank and Halifax all said they offered products from a limited number of companies, wrongly implying an element of choice for certain products.

Which? magazine editor Neil Fowler said:.....continued below

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"Which? has been testing financial advisers for over 20 years and our results have been consistent throughout that time. Our latest investigation leads us to believe that the industry has failed consumers, and is still failing them. Most of us need help with more complex financial decisions so whether we love them or hate them, we can't do without advisers. There are some good advisers out there but they take a bit of finding."

David Elms, chief executive of IFA Promotion, the body representing small financial advisers, said: "Clearly on the evidence of this mystery shopping exercise the industry has some work to do. However, the Which? survey was a very small sample." He said a recent survey of 500,000 consumers showed more than 90% were satisfied with their IFA's advice.

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