Can You Trust Your Bank? Panorama

Tonight on Panorama, can we trust our high-street banks? Why it is

the difference between somebody coming in and picking up your goods

and walking off with them? The difference is that the bank's

charge me to do it. Rocked by stories of mis-selling. It was a

complete scandal, the product was far too risky. It fell in value by

over 50%, and when people complained, they rejected it.

the banks now cleaned up their act? Staff are too often incentivise to

sell products that of most other proverbs, not sell products that

We go undercover to test the advice on offer to Britain's 35 million

It is inaccurate, it is misleading, and it is building up the

credibility of that particular Latest figures show that 10,000 of

us make a complaint against the high street banks every day. The

industry has been hit by a range of high profile mis-selling scandals.

Banks are braced for compensation payout stud macro people believe

they were wrongly sold... The BVA has lost a High Court challenge

over new regulations over the selling of payment protection

insurance... It has been a torrid couple of years, but according to

the banks, the time for St sorry is over. They are now rebuilding trust

with their customers. Well, that is all right, then. Although it is far

from all right for the thousands of customers who have lost out, like

Heather Adams. She is still counting the cost after taking

early retirement from her job in a Post-room five years ago. She went

to have bank, which was then Abbey National, now part of Santander,

for advice on how best to invest her �11,000 pension lump sum.

asked me, did I have any great need for the money immediately, and I

said no, not really, I just wanted it to be safe, it was a nest egg

for my future. A bit of growth would be nice, but I wanted my

Capital secure. Why did you take his word for it that you knew what

he was doing? He was a financial adviser. I had banked with them,

who'd you go for two financial advice if not your bank? But the

advice was misleading. Far from being saved, the �11,000 more than

half in just six months. Worried she would lose the lot, she decided

to cut her losses and get back what she could. I just did not want the

money tied up in that. I needed to know how much I had got and what I

could do with it. Well, that was it, really. They gave me �5,000 back.

The bank rejected her complaint of mis-selling, but she went to the

Financial Ombudsman Service, who ruled in her favour and order

Santander to refund or a third of �5,000 plus interest. But after

paying a firm that helped with their claim, she is still thousands

out of pocket. It sounds stupid, but I trusted him to do the best

thing for me. And I really felt that he was interested in helping

me. 70% of us are savers, and like Heather, most of us are cautious

and do not want to gamble with our money. Yet, according to a former

in branch financial adviser, bonuses or commissions mean that it

is in the advisers' interests to point customers towards investment

products. What is the everyday working codger like within a high-

street branch? Well, you don't want somebody who just wants a deposit

account, because you do not get paid on it. You have got to educate

that client for going into an investment that has some element of

risk. At the end of the year, if you are a top producer, you can win

a holiday. One year they went to And we do not have to take just his

word for it. Banks do not make any money on selling savings accounts,

but they can make quite a lot of money selling investment products.

Staff are too often incentivise to sell products that will foster

their profits and not sell products that are right for the customer. --

Paul Stout. To test the advice on offer, we decided to go undercover.

It is only a snapshot and not very scientific, but we said two would

be invested into branches of high- street banks. -- investors. Both

Both were told to make it crystal clear that they were very cautious

with their cash. Watching what happened are independent financial

experts Louise Oliver and Adrian Lowcock. First up, charges. The

rules state that the banks must be clear about their fees. All the

advisers listed them, but one at Lloyds TSB caught power experts'

eye for being, in their view, too If you are an inexperienced

investor, which these people were, you are going to struggle to keep

up with that. To understand it and know what it means that he will be

paying in fees. The same adviser implied that Lloyds TSB was

offering some of the lowest set of It is inaccurate, it is misleading,

and it is building up the credibility of that particular

solution for the client. The reason that the adviser is probably doing

it is because he knows that person In the same meeting, our experts

felt the adviser was less clear What he did not do was to say, that

is coming out of your money. He said, that is coming out of the

fund. It is almost distances the investment from the client. It is

your money in that fund, so no matter where it comes from, that

still affects the return and your investment. If the fund does not go

up in value, it would go down because of charges. The key to the

rules is about being Clare, -- clear, fair and not misleading.

Have we got that? I do not think so. They were not clear on the charges.

Most people do not realise that just a few extra points of a

percentage on your charges can wipe thousands of pounds off your

investment over five, 10 or 15 years, and so it is really

important that banks are up front about charges. At the moment they

are not being upfront. Remember Heather Adams? She won an apology

and some cash back from Santander. But complains of mis-selling on not

just confined to one bag. The regulator, the Financial Services

Authority, has this year ruled tens of thousands of people have been

mis-sold products. Her husband, Tony, is one of them. Four years

ago, he also retired from the post room and turned to his bank,

Barclays, for advice on what to do with his pension pot. Did you make

it clear, the kind of investment you were after? I certainly did not

make the point clear what sort of investment I wanted, other than

that I wanted to draw interests off this amount of money. And you

wanted your Money safe or gambled? Yes, yes, yes. I do not go to the

doctor and say, can you give me a lethal disease? I do not go to the

bank and say, can you lose all my money? Less than two years later,

his money had halved. He visited his branch and spoke to an adviser.

I said to him, well, what will happen in the end? He said, the way

it is going at the moment, you will probably not have any money.

did you react to that? Well, I did inquire what all these management

fees that I was paying were doing, because it appears to me that I was

paying them an annual percentage to take my money or lose my money.

What sort of tasted it leave you with? I suppose the same taste as

if you had been burgled or Mark Doyle... What is the difference

between somebody coming in and picking up your goods and walking

off with them? The difference with the bank is that they charged me to

Barclays said it was nothing to do with them, but when Tony complained

to the financial ombudsman, he won and Barclays was ordered to refund

in the balance with interest. Barclays accepted they had let him

down and apologise. But with the fees involved in winning his claim,

he still lost out. And he is not alone. The Barclays victims club

has seen 11,000 customers lose half their savings in two investment

products that Barclays recommended. It was a complete scandal. The

product was far too risky. It fell in value by over 50%. When people

started complaining, they rejected the complaints. It has caused

enormous anguish. Half of my clients are over the age of 70, I

have got one client over the age of 90 the last half of his savings. It

was a shocking story. Barclays came out of it very badly. This year,

Barclays was fined �7.7 million and ordered to pay 71 million back to

It all seems a long way from the days when the bank manager took a

This seems a sensible proposition to make. Good! I know you pretty

well, that helps a lot. You trust me not to go on a spree if you give

me the money? You could put it that way, if you like. These days,

targets driven advisers sell �24 billion worth of investment

products each year. Barclays has now decided to stop offering in-

house advice to customers altogether. But walk down any high

street, and there's no shortage of other banks ready to offer advice

on a dizzying array of products to tempt Britain's 35 million savers

But are the bank's advisers so focused on making a sale that they

are less focused on looking after their customers' best interests?

Watching the undercover footage, our independent experts were

concerned about some of the claims they heard. The sales patter of the

Royal Bank of Scotland adviser did Yeah, I mean, we have got a sale on

and we do not know when it will end. That is a little bit pressured, I

think. He should not really have a sale. You should be giving them the

best product at the best price for year round. The experts thought the

HSBC adviser was applying too much One adviser said, you are losing

money just sitting here, didn't he? Yes, very worrying, and the

expectations of the client are raised, aren't they? What he was

saying is, hurry up, you are missing out on gains, the market is

going up. Very dangerous. Back at RBS, the adviser appeared to claim

Going from �50,000 to zero, that definitely can't happen, not

possible. It's unlikely, but you shouldn't use absolutes. You can't.

Investments, you don't know what happens. You cannot know what will

Do you think adviser is the right word for these in branch employees?

Really, they are selling products, aren't they? I think we would push

back quite strongly at the allegation that financial advisers

are simply glorified sales people. I think we feel that, within the

regulatory regime, and through the relationships they build with their

people, they provide an invaluable service. They give a lot of

detailed financial advice and support to people who perhaps are

not quite confident enough to step into the market on their own.

shocking just how much people trust their banks. I've had people saying,

but I trusted them, I've banked with them for 40 years, I banked

with them for 50 years, I thought they would look after my interests?

People do not understand that banks are there to turn a profit. There

is nothing wrong with turning a profit, but you have to treat

If your family has been with the same banker for 100 years, you

would be forgiven for thinking they would have your best interests at

heart. Farmer's wife Barbara Kerr was left some land when her father

died. See over there? Six years ago, she went to their local Royal Bank

of Scotland for advice on what to do with the �160,000 she received

from the sale of the land. decided I would invest it and not

spend it, wasted, just have debit interest on it. You went to your

local bank, RBS, to invest this money. How did that go? Well, I had

no experience of investing. Therefore, I was relying solely on

her for her advice. So, she had a chat and I said, well, I don't want

a big risk. Two years later, Barbara was visited by another

adviser from her bank. Her investment had gone up. But by just

�6,000. Around this time, she signed a piece of paper moving her

money from a cautious fund and to a riskier category. Within a year, it

had lost �30,000. I can't remember saying to her, change it. Why would

I? I told her at the beginning, I don't want high risk. I could never

see reaching 74 and changing at such an age. To live to 75 and then

be a risky person. With her confidence in the band shattered,

Barbara withdrew what was left of the plan and is taking her

complaint to the financial A customer's attitude to risk is

the most important thing for banks to get right, according to our

experts viewing the undercover footage. My attitude to risk will

be different from the next person's. I might be cautious, but the next

person might consider my cautious very different to their's. You

basically go to a process narrowing down what that person is going to

tolerate. The experts were impressed with the staff at the top

and Santander, who they fielded pretty much everything by the book.

-- at the Co-op. All of the banks that our undercover researchers

visited did a risk questionnaire before they discuss specific

investments. All except an HSBC adviser, who took a different

One of the worrying things is that he says, I'd been looking into your

eyes, I've been building up a feeling of your attitude to risk.

Unless he's Derren Brown, I'm not sure you can do this. What we saw

is that the investor didn't get the risk profile questionnaire until

the very end of the second meeting. He doesn't seem very keen to fill

that in. It is all lackadaisical, we can fill it in if you want to.

At the first meeting, the adviser initially suggested our savers

should look at a cautious investment. It would mean lower

returns but would be safer than the bank's other categories called

Even at the second meeting, the adviser still seemed keen on

But after guiding our undercover customer through HSBC's risk

assessment process, a surprise Adrian, what did you make of the

last bit of advice we heard? interesting thing was that they

mentioned putting it into a balanced profile. Throughout the

previous bit of the conversation, she was always cautious. There's a

big difference on the potential risks. I don't think that is

balanced, on paper. Although the tick box came out as balanced

comedy perhaps use your judgement to say, actually, are you happy to

take that kind of a risk? HSBC told Are there any general conclusions

you can arrive at about high street bank advice for investors? We've

seen charges not very well explained, risk wasn't well

explained, fact-finding was rushed. In some instances we saw misleading

on the charges conversations, confusion on the risks

conversations. That doesn't seem like a good deal for clients was

that the problem is they're probably seeing five clients in a

day. It's too many. They need to slow that process down. If that

means less product sales, all the better. Are there enough safeguards

in place to ensure that the armies of advisers don't make

inappropriate claims or push people towards the wrong product?

paperwork that is provided gives a cold, Fash trawl analysis of the

discussion, the risk appetite and the products that have been

recommended. That can always be tested against advice taken, a

second opinion, almost, taken from others. I think there are more than

adequate checks and balances. are there? For years, the banks

rejected complaints of their mis- selling of loan payment protection

insurance. The British Bankers Association fought against

compensating customers. But in April this year, all that changed.

The Financial Services Authority and the courts ruled against the

banks. The PPI scandal is set to cost them billions. It has damaged

the banks' reputations even further. And it has shown us how mis-selling

a financial product can become almost endemic. At consider website

Money Saving Expert, Guy and Ken knows more about mis-selling of PPI

than most. As a student he worked for a high-street bank and their

customer services call centre. say PPI mis-selling was rooted deep

in the culture of the bank. We'd take a phone call, someone would

ask for their balance, at the end of the phone call we had to sell

PPI. The typical thing would say is, do you work at least 16 hours a

week? If the answer was yes, we would say, you may qualify for free

insurance. Free insurance? Believe it or not, that is how it was sold.

The bank would say that you get 30 days' free. The truth is, if you

didn't cancel after 30 days, it would roll on and on. Over the

length of a policy you could be charged thousands and thousands of

pounds. We would get phone calls from customers saying, please can

you remove PPI from our accounts? Annette asked for it. It could have

been someone sitting next to me that had added it without their

Some who don't trust the banks to look after their best interests are

When Chris Attwood retired from here IT project management career,

she decided to take matters into her own hands. I retired one day

before my 60th birthday. I decided I was going to try and make a

living out of investing. I actually thought I might last about six

months. Maybe nine months? I'm finding that four years later I am

still managing to live on my investments. I can't see an end to

it. Chris had �175,000 to invest. To play safe, she kept a third back

in cash. She needed the rest to earn �10,000 a year, which meant

splitting it between cautious and more risky investments. I needed to

invest in stocks that carried some risk, so that I had a chance of

making enough money to live on. You get a feel for the markets, if you

spend a few hours a week on it. lot of people would think that

going to a bank or financial adviser would give them greater

security with their money. Is that not the case? It does make you feel

safe. But when you look at the returns you get when you go to a

bank, the returns are not there. You can make more money if you do

it yourself. Obviously, you can lose. But you're not paying

somebody else to do it for you. Risking your financial future alone

requires lots of homework and there is no one else to blame if you get

it wrong. So it's hardly surprising it is a step too far for most of us.

Next week, the regulator is due to publish a paper which could

recommend limiting the investments banks are allowed to sell. It's a

move that can't come soon enough for some. We hope the product

intervention paper will be to the FSA stepping in at a much earlier

stage. The moment that that products are conceived, the FSA

will step in and ban them so that they can't be sold to the mass

market through bank branches. All too often we see products that are

unsuitable, sold through bank branches, and it's not until

thousands of people have bought them that the FSA steps in and put

an end to it. The body that represents the banks is not yet

convinced of the need for tighter regulation. How are the banks going

to gain the trust of their customers again? What we must be

sure not to lose in this is that, beneath it all, there are a lot of

very strong, positive working relationships that enable customers

to access financial services in an entirely appropriate manner.

telling that to the victims of mis- selling, who have lost not just

confidence in the banks but also their hard-earned money. I don't

trust any banker. I wouldn't trust a banker. I think they are the last

place on earth that you should go for financial advice. Britain's

savers have been battered by low interest rates ever since everyone

else's love-affair with credit almost destroyed the economy.

Unless it is stopped, mis-selling of investments could leave them