:00:10. > :00:15.Tonight on Panorama, can we trust our high-street banks? Why it is
:00:15. > :00:18.the difference between somebody coming in and picking up your goods
:00:18. > :00:23.and walking off with them? The difference is that the bank's
:00:23. > :00:28.charge me to do it. Rocked by stories of mis-selling. It was a
:00:28. > :00:33.complete scandal, the product was far too risky. It fell in value by
:00:33. > :00:38.over 50%, and when people complained, they rejected it.
:00:38. > :00:42.the banks now cleaned up their act? Staff are too often incentivise to
:00:42. > :00:50.sell products that of most other proverbs, not sell products that
:00:50. > :00:59.We go undercover to test the advice on offer to Britain's 35 million
:00:59. > :01:09.It is inaccurate, it is misleading, and it is building up the
:01:09. > :01:20.
:01:20. > :01:25.credibility of that particular Latest figures show that 10,000 of
:01:25. > :01:31.us make a complaint against the high street banks every day. The
:01:31. > :01:34.industry has been hit by a range of high profile mis-selling scandals.
:01:34. > :01:39.Banks are braced for compensation payout stud macro people believe
:01:39. > :01:42.they were wrongly sold... The BVA has lost a High Court challenge
:01:42. > :01:47.over new regulations over the selling of payment protection
:01:47. > :01:53.insurance... It has been a torrid couple of years, but according to
:01:53. > :01:58.the banks, the time for St sorry is over. They are now rebuilding trust
:01:58. > :02:02.with their customers. Well, that is all right, then. Although it is far
:02:02. > :02:05.from all right for the thousands of customers who have lost out, like
:02:05. > :02:11.Heather Adams. She is still counting the cost after taking
:02:11. > :02:15.early retirement from her job in a Post-room five years ago. She went
:02:15. > :02:21.to have bank, which was then Abbey National, now part of Santander,
:02:21. > :02:26.for advice on how best to invest her �11,000 pension lump sum.
:02:26. > :02:31.asked me, did I have any great need for the money immediately, and I
:02:31. > :02:35.said no, not really, I just wanted it to be safe, it was a nest egg
:02:35. > :02:39.for my future. A bit of growth would be nice, but I wanted my
:02:39. > :02:46.Capital secure. Why did you take his word for it that you knew what
:02:46. > :02:49.he was doing? He was a financial adviser. I had banked with them,
:02:49. > :02:55.who'd you go for two financial advice if not your bank? But the
:02:55. > :02:59.advice was misleading. Far from being saved, the �11,000 more than
:03:00. > :03:05.half in just six months. Worried she would lose the lot, she decided
:03:05. > :03:09.to cut her losses and get back what she could. I just did not want the
:03:09. > :03:19.money tied up in that. I needed to know how much I had got and what I
:03:19. > :03:19.
:03:19. > :03:25.could do with it. Well, that was it, really. They gave me �5,000 back.
:03:25. > :03:28.The bank rejected her complaint of mis-selling, but she went to the
:03:28. > :03:33.Financial Ombudsman Service, who ruled in her favour and order
:03:33. > :03:36.Santander to refund or a third of �5,000 plus interest. But after
:03:36. > :03:45.paying a firm that helped with their claim, she is still thousands
:03:45. > :03:49.out of pocket. It sounds stupid, but I trusted him to do the best
:03:49. > :03:57.thing for me. And I really felt that he was interested in helping
:03:57. > :04:01.me. 70% of us are savers, and like Heather, most of us are cautious
:04:01. > :04:06.and do not want to gamble with our money. Yet, according to a former
:04:06. > :04:09.in branch financial adviser, bonuses or commissions mean that it
:04:09. > :04:15.is in the advisers' interests to point customers towards investment
:04:15. > :04:20.products. What is the everyday working codger like within a high-
:04:20. > :04:24.street branch? Well, you don't want somebody who just wants a deposit
:04:24. > :04:27.account, because you do not get paid on it. You have got to educate
:04:27. > :04:32.that client for going into an investment that has some element of
:04:32. > :04:39.risk. At the end of the year, if you are a top producer, you can win
:04:39. > :04:44.a holiday. One year they went to And we do not have to take just his
:04:44. > :04:48.word for it. Banks do not make any money on selling savings accounts,
:04:48. > :04:53.but they can make quite a lot of money selling investment products.
:04:53. > :04:56.Staff are too often incentivise to sell products that will foster
:04:56. > :05:02.their profits and not sell products that are right for the customer. --
:05:02. > :05:06.Paul Stout. To test the advice on offer, we decided to go undercover.
:05:06. > :05:12.It is only a snapshot and not very scientific, but we said two would
:05:12. > :05:22.be invested into branches of high- street banks. -- investors. Both
:05:22. > :05:26.
:05:26. > :05:33.Both were told to make it crystal clear that they were very cautious
:05:33. > :05:39.with their cash. Watching what happened are independent financial
:05:39. > :05:45.experts Louise Oliver and Adrian Lowcock. First up, charges. The
:05:45. > :05:50.rules state that the banks must be clear about their fees. All the
:05:50. > :06:00.advisers listed them, but one at Lloyds TSB caught power experts'
:06:00. > :06:11.
:06:11. > :06:14.eye for being, in their view, too If you are an inexperienced
:06:14. > :06:19.investor, which these people were, you are going to struggle to keep
:06:19. > :06:24.up with that. To understand it and know what it means that he will be
:06:24. > :06:34.paying in fees. The same adviser implied that Lloyds TSB was
:06:34. > :06:41.
:06:42. > :06:45.offering some of the lowest set of It is inaccurate, it is misleading,
:06:45. > :06:49.and it is building up the credibility of that particular
:06:49. > :06:59.solution for the client. The reason that the adviser is probably doing
:06:59. > :07:09.
:07:09. > :07:19.it is because he knows that person In the same meeting, our experts
:07:19. > :07:27.
:07:27. > :07:31.felt the adviser was less clear What he did not do was to say, that
:07:31. > :07:36.is coming out of your money. He said, that is coming out of the
:07:36. > :07:39.fund. It is almost distances the investment from the client. It is
:07:39. > :07:43.your money in that fund, so no matter where it comes from, that
:07:43. > :07:47.still affects the return and your investment. If the fund does not go
:07:47. > :07:52.up in value, it would go down because of charges. The key to the
:07:52. > :07:57.rules is about being Clare, -- clear, fair and not misleading.
:07:57. > :08:07.Have we got that? I do not think so. They were not clear on the charges.
:08:07. > :08:16.
:08:16. > :08:20.Most people do not realise that just a few extra points of a
:08:20. > :08:24.percentage on your charges can wipe thousands of pounds off your
:08:24. > :08:27.investment over five, 10 or 15 years, and so it is really
:08:27. > :08:35.important that banks are up front about charges. At the moment they
:08:35. > :08:40.are not being upfront. Remember Heather Adams? She won an apology
:08:40. > :08:45.and some cash back from Santander. But complains of mis-selling on not
:08:45. > :08:48.just confined to one bag. The regulator, the Financial Services
:08:48. > :08:53.Authority, has this year ruled tens of thousands of people have been
:08:53. > :08:58.mis-sold products. Her husband, Tony, is one of them. Four years
:08:58. > :09:02.ago, he also retired from the post room and turned to his bank,
:09:02. > :09:07.Barclays, for advice on what to do with his pension pot. Did you make
:09:07. > :09:12.it clear, the kind of investment you were after? I certainly did not
:09:12. > :09:18.make the point clear what sort of investment I wanted, other than
:09:18. > :09:23.that I wanted to draw interests off this amount of money. And you
:09:23. > :09:27.wanted your Money safe or gambled? Yes, yes, yes. I do not go to the
:09:27. > :09:33.doctor and say, can you give me a lethal disease? I do not go to the
:09:33. > :09:37.bank and say, can you lose all my money? Less than two years later,
:09:37. > :09:42.his money had halved. He visited his branch and spoke to an adviser.
:09:42. > :09:46.I said to him, well, what will happen in the end? He said, the way
:09:46. > :09:52.it is going at the moment, you will probably not have any money.
:09:52. > :09:56.did you react to that? Well, I did inquire what all these management
:09:56. > :10:00.fees that I was paying were doing, because it appears to me that I was
:10:00. > :10:06.paying them an annual percentage to take my money or lose my money.
:10:06. > :10:12.What sort of tasted it leave you with? I suppose the same taste as
:10:12. > :10:17.if you had been burgled or Mark Doyle... What is the difference
:10:17. > :10:21.between somebody coming in and picking up your goods and walking
:10:21. > :10:30.off with them? The difference with the bank is that they charged me to
:10:30. > :10:34.Barclays said it was nothing to do with them, but when Tony complained
:10:34. > :10:37.to the financial ombudsman, he won and Barclays was ordered to refund
:10:37. > :10:43.in the balance with interest. Barclays accepted they had let him
:10:43. > :10:49.down and apologise. But with the fees involved in winning his claim,
:10:49. > :10:55.he still lost out. And he is not alone. The Barclays victims club
:10:55. > :10:59.has seen 11,000 customers lose half their savings in two investment
:10:59. > :11:05.products that Barclays recommended. It was a complete scandal. The
:11:05. > :11:08.product was far too risky. It fell in value by over 50%. When people
:11:08. > :11:14.started complaining, they rejected the complaints. It has caused
:11:14. > :11:19.enormous anguish. Half of my clients are over the age of 70, I
:11:19. > :11:25.have got one client over the age of 90 the last half of his savings. It
:11:25. > :11:30.was a shocking story. Barclays came out of it very badly. This year,
:11:30. > :11:40.Barclays was fined �7.7 million and ordered to pay 71 million back to
:11:40. > :11:50.It all seems a long way from the days when the bank manager took a
:11:50. > :11:50.
:11:50. > :11:54.This seems a sensible proposition to make. Good! I know you pretty
:11:54. > :12:00.well, that helps a lot. You trust me not to go on a spree if you give
:12:00. > :12:04.me the money? You could put it that way, if you like. These days,
:12:04. > :12:09.targets driven advisers sell �24 billion worth of investment
:12:09. > :12:13.products each year. Barclays has now decided to stop offering in-
:12:13. > :12:17.house advice to customers altogether. But walk down any high
:12:17. > :12:21.street, and there's no shortage of other banks ready to offer advice
:12:21. > :12:30.on a dizzying array of products to tempt Britain's 35 million savers
:12:30. > :12:36.But are the bank's advisers so focused on making a sale that they
:12:36. > :12:39.are less focused on looking after their customers' best interests?
:12:39. > :12:45.Watching the undercover footage, our independent experts were
:12:45. > :12:55.concerned about some of the claims they heard. The sales patter of the
:12:55. > :13:03.
:13:03. > :13:07.Royal Bank of Scotland adviser did Yeah, I mean, we have got a sale on
:13:07. > :13:12.and we do not know when it will end. That is a little bit pressured, I
:13:12. > :13:18.think. He should not really have a sale. You should be giving them the
:13:18. > :13:28.best product at the best price for year round. The experts thought the
:13:28. > :13:31.
:13:31. > :13:36.HSBC adviser was applying too much One adviser said, you are losing
:13:36. > :13:40.money just sitting here, didn't he? Yes, very worrying, and the
:13:40. > :13:44.expectations of the client are raised, aren't they? What he was
:13:44. > :13:50.saying is, hurry up, you are missing out on gains, the market is
:13:50. > :14:00.going up. Very dangerous. Back at RBS, the adviser appeared to claim
:14:00. > :14:14.
:14:14. > :14:22.Going from �50,000 to zero, that definitely can't happen, not
:14:22. > :14:25.possible. It's unlikely, but you shouldn't use absolutes. You can't.
:14:25. > :14:35.Investments, you don't know what happens. You cannot know what will
:14:35. > :15:05.
:15:05. > :15:10.Do you think adviser is the right word for these in branch employees?
:15:10. > :15:12.Really, they are selling products, aren't they? I think we would push
:15:12. > :15:18.back quite strongly at the allegation that financial advisers
:15:18. > :15:21.are simply glorified sales people. I think we feel that, within the
:15:21. > :15:26.regulatory regime, and through the relationships they build with their
:15:26. > :15:29.people, they provide an invaluable service. They give a lot of
:15:29. > :15:37.detailed financial advice and support to people who perhaps are
:15:37. > :15:41.not quite confident enough to step into the market on their own.
:15:41. > :15:46.shocking just how much people trust their banks. I've had people saying,
:15:46. > :15:50.but I trusted them, I've banked with them for 40 years, I banked
:15:50. > :15:53.with them for 50 years, I thought they would look after my interests?
:15:53. > :15:57.People do not understand that banks are there to turn a profit. There
:15:57. > :16:07.is nothing wrong with turning a profit, but you have to treat
:16:07. > :16:09.
:16:09. > :16:12.If your family has been with the same banker for 100 years, you
:16:12. > :16:18.would be forgiven for thinking they would have your best interests at
:16:18. > :16:27.heart. Farmer's wife Barbara Kerr was left some land when her father
:16:27. > :16:32.died. See over there? Six years ago, she went to their local Royal Bank
:16:32. > :16:38.of Scotland for advice on what to do with the �160,000 she received
:16:38. > :16:44.from the sale of the land. decided I would invest it and not
:16:44. > :16:52.spend it, wasted, just have debit interest on it. You went to your
:16:52. > :16:56.local bank, RBS, to invest this money. How did that go? Well, I had
:16:56. > :17:02.no experience of investing. Therefore, I was relying solely on
:17:02. > :17:07.her for her advice. So, she had a chat and I said, well, I don't want
:17:07. > :17:12.a big risk. Two years later, Barbara was visited by another
:17:12. > :17:18.adviser from her bank. Her investment had gone up. But by just
:17:18. > :17:23.�6,000. Around this time, she signed a piece of paper moving her
:17:23. > :17:31.money from a cautious fund and to a riskier category. Within a year, it
:17:31. > :17:39.had lost �30,000. I can't remember saying to her, change it. Why would
:17:39. > :17:47.I? I told her at the beginning, I don't want high risk. I could never
:17:47. > :17:53.see reaching 74 and changing at such an age. To live to 75 and then
:17:53. > :17:56.be a risky person. With her confidence in the band shattered,
:17:56. > :18:06.Barbara withdrew what was left of the plan and is taking her
:18:06. > :18:15.
:18:15. > :18:18.complaint to the financial A customer's attitude to risk is
:18:18. > :18:22.the most important thing for banks to get right, according to our
:18:22. > :18:29.experts viewing the undercover footage. My attitude to risk will
:18:29. > :18:36.be different from the next person's. I might be cautious, but the next
:18:36. > :18:38.person might consider my cautious very different to their's. You
:18:38. > :18:43.basically go to a process narrowing down what that person is going to
:18:43. > :18:46.tolerate. The experts were impressed with the staff at the top
:18:46. > :18:51.and Santander, who they fielded pretty much everything by the book.
:18:51. > :18:55.-- at the Co-op. All of the banks that our undercover researchers
:18:55. > :18:59.visited did a risk questionnaire before they discuss specific
:18:59. > :19:09.investments. All except an HSBC adviser, who took a different
:19:09. > :19:26.
:19:26. > :19:30.One of the worrying things is that he says, I'd been looking into your
:19:30. > :19:34.eyes, I've been building up a feeling of your attitude to risk.
:19:34. > :19:38.Unless he's Derren Brown, I'm not sure you can do this. What we saw
:19:38. > :19:48.is that the investor didn't get the risk profile questionnaire until
:19:48. > :20:03.
:20:03. > :20:11.the very end of the second meeting. He doesn't seem very keen to fill
:20:11. > :20:15.that in. It is all lackadaisical, we can fill it in if you want to.
:20:15. > :20:17.At the first meeting, the adviser initially suggested our savers
:20:17. > :20:23.should look at a cautious investment. It would mean lower
:20:23. > :20:31.returns but would be safer than the bank's other categories called
:20:31. > :20:41.Even at the second meeting, the adviser still seemed keen on
:20:41. > :20:52.
:20:53. > :21:02.But after guiding our undercover customer through HSBC's risk
:21:03. > :21:17.
:21:17. > :21:23.assessment process, a surprise Adrian, what did you make of the
:21:23. > :21:27.last bit of advice we heard? interesting thing was that they
:21:27. > :21:30.mentioned putting it into a balanced profile. Throughout the
:21:30. > :21:34.previous bit of the conversation, she was always cautious. There's a
:21:34. > :21:38.big difference on the potential risks. I don't think that is
:21:38. > :21:42.balanced, on paper. Although the tick box came out as balanced
:21:42. > :21:52.comedy perhaps use your judgement to say, actually, are you happy to
:21:52. > :22:01.
:22:01. > :22:06.take that kind of a risk? HSBC told Are there any general conclusions
:22:06. > :22:09.you can arrive at about high street bank advice for investors? We've
:22:09. > :22:13.seen charges not very well explained, risk wasn't well
:22:13. > :22:17.explained, fact-finding was rushed. In some instances we saw misleading
:22:17. > :22:20.on the charges conversations, confusion on the risks
:22:20. > :22:24.conversations. That doesn't seem like a good deal for clients was
:22:24. > :22:28.that the problem is they're probably seeing five clients in a
:22:28. > :22:35.day. It's too many. They need to slow that process down. If that
:22:35. > :22:39.means less product sales, all the better. Are there enough safeguards
:22:39. > :22:43.in place to ensure that the armies of advisers don't make
:22:43. > :22:49.inappropriate claims or push people towards the wrong product?
:22:49. > :22:52.paperwork that is provided gives a cold, Fash trawl analysis of the
:22:52. > :22:57.discussion, the risk appetite and the products that have been
:22:57. > :23:00.recommended. That can always be tested against advice taken, a
:23:00. > :23:07.second opinion, almost, taken from others. I think there are more than
:23:07. > :23:10.adequate checks and balances. are there? For years, the banks
:23:10. > :23:17.rejected complaints of their mis- selling of loan payment protection
:23:17. > :23:26.insurance. The British Bankers Association fought against
:23:26. > :23:29.compensating customers. But in April this year, all that changed.
:23:29. > :23:36.The Financial Services Authority and the courts ruled against the
:23:36. > :23:39.banks. The PPI scandal is set to cost them billions. It has damaged
:23:39. > :23:48.the banks' reputations even further. And it has shown us how mis-selling
:23:48. > :23:52.a financial product can become almost endemic. At consider website
:23:52. > :23:57.Money Saving Expert, Guy and Ken knows more about mis-selling of PPI
:23:57. > :24:02.than most. As a student he worked for a high-street bank and their
:24:02. > :24:06.customer services call centre. say PPI mis-selling was rooted deep
:24:06. > :24:10.in the culture of the bank. We'd take a phone call, someone would
:24:10. > :24:14.ask for their balance, at the end of the phone call we had to sell
:24:14. > :24:19.PPI. The typical thing would say is, do you work at least 16 hours a
:24:19. > :24:22.week? If the answer was yes, we would say, you may qualify for free
:24:22. > :24:27.insurance. Free insurance? Believe it or not, that is how it was sold.
:24:27. > :24:30.The bank would say that you get 30 days' free. The truth is, if you
:24:30. > :24:33.didn't cancel after 30 days, it would roll on and on. Over the
:24:33. > :24:37.length of a policy you could be charged thousands and thousands of
:24:37. > :24:41.pounds. We would get phone calls from customers saying, please can
:24:41. > :24:44.you remove PPI from our accounts? Annette asked for it. It could have
:24:44. > :24:53.been someone sitting next to me that had added it without their
:24:53. > :25:03.Some who don't trust the banks to look after their best interests are
:25:03. > :25:03.
:25:03. > :25:10.When Chris Attwood retired from here IT project management career,
:25:10. > :25:14.she decided to take matters into her own hands. I retired one day
:25:14. > :25:18.before my 60th birthday. I decided I was going to try and make a
:25:18. > :25:24.living out of investing. I actually thought I might last about six
:25:25. > :25:30.months. Maybe nine months? I'm finding that four years later I am
:25:30. > :25:38.still managing to live on my investments. I can't see an end to
:25:38. > :25:42.it. Chris had �175,000 to invest. To play safe, she kept a third back
:25:42. > :25:47.in cash. She needed the rest to earn �10,000 a year, which meant
:25:47. > :25:52.splitting it between cautious and more risky investments. I needed to
:25:52. > :25:56.invest in stocks that carried some risk, so that I had a chance of
:25:56. > :26:00.making enough money to live on. You get a feel for the markets, if you
:26:00. > :26:03.spend a few hours a week on it. lot of people would think that
:26:03. > :26:08.going to a bank or financial adviser would give them greater
:26:08. > :26:12.security with their money. Is that not the case? It does make you feel
:26:12. > :26:19.safe. But when you look at the returns you get when you go to a
:26:19. > :26:22.bank, the returns are not there. You can make more money if you do
:26:22. > :26:26.it yourself. Obviously, you can lose. But you're not paying
:26:26. > :26:29.somebody else to do it for you. Risking your financial future alone
:26:29. > :26:36.requires lots of homework and there is no one else to blame if you get
:26:36. > :26:40.it wrong. So it's hardly surprising it is a step too far for most of us.
:26:40. > :26:46.Next week, the regulator is due to publish a paper which could
:26:46. > :26:50.recommend limiting the investments banks are allowed to sell. It's a
:26:50. > :26:54.move that can't come soon enough for some. We hope the product
:26:54. > :26:58.intervention paper will be to the FSA stepping in at a much earlier
:26:58. > :27:02.stage. The moment that that products are conceived, the FSA
:27:02. > :27:05.will step in and ban them so that they can't be sold to the mass
:27:05. > :27:09.market through bank branches. All too often we see products that are
:27:09. > :27:12.unsuitable, sold through bank branches, and it's not until
:27:12. > :27:15.thousands of people have bought them that the FSA steps in and put
:27:15. > :27:20.an end to it. The body that represents the banks is not yet
:27:20. > :27:24.convinced of the need for tighter regulation. How are the banks going
:27:24. > :27:30.to gain the trust of their customers again? What we must be
:27:30. > :27:34.sure not to lose in this is that, beneath it all, there are a lot of
:27:34. > :27:41.very strong, positive working relationships that enable customers
:27:41. > :27:45.to access financial services in an entirely appropriate manner.
:27:45. > :27:48.telling that to the victims of mis- selling, who have lost not just
:27:49. > :27:55.confidence in the banks but also their hard-earned money. I don't
:27:55. > :28:01.trust any banker. I wouldn't trust a banker. I think they are the last
:28:01. > :28:06.place on earth that you should go for financial advice. Britain's
:28:06. > :28:09.savers have been battered by low interest rates ever since everyone
:28:09. > :28:13.else's love-affair with credit almost destroyed the economy.
:28:13. > :28:23.Unless it is stopped, mis-selling of investments could leave them
:28:23. > :28:28.