I recently read an article about Angela Knight, who now heads up the British Bankers’ Association (BBA). You may remember her as conservative Member of Parliament for Erewash from 1992 to 1997, during some of which time she was economic secretary to the Treasury.

This should mean that she knows something about the way finance in the UK operates; but she also appears to have a politician’s ability to press her own views without considering the impact these may have on others.

Another go at the banks?
Yes, but only because they seem to be making another “special treatment plea”. And this one impinges directly on our home territory.

What the BBA appears to be claiming is that its financial advisers should be allowed to operate with a lower level of qualification than independent financial advisers because they only promote their own products – and in many cases only part of the product range.

I am sorry, but this is absolutely outrageous. Why? Because it is based on the premise that financial services products can be ‘sold’ out of context. The regulators are currently undertaking what is called a Retail Distribution Review (RDR), which is intended to enhance the level of service given to consumers. The BBA is now apparently suggesting that, as their employees are only advising on (for example) unit trusts, putting them through the same high level professional education that an IFA undertakes would be a waste of money.

Selling is not advice
Well I have news for the BBA; advisers who ‘simply sell unit trusts’ are not serving the investor’s best interests. They cannot – without undertaking a comprehensive fact find and fully understanding the needs, resources, responsibilities and objectives of their clients – expect to provide advice that will be ‘best’ in the truest sense. For example, it may be that a higher real priority than investing in a unit trust would actually be to provide life insurance to protect the family’s interests should the breadwinner die.

Without having the professional training that IFAs are required to achieve (and it is likely that this will become even tougher in future), how can a bank salesperson possibly know what is really required. Relying on what the customer says is (with due respect to consumers) as useful as a doctor asking his patient to self-diagnose. (Mind you, NHS Direct might think this works.)

What is their rationale?
The banks are concerned that demanding a similar level of expertise from their sales people that is expected of an IFA will increase costs and make advice more expensive for consumers. Never mind the fact that consumers almost always benefit from having independent advice (because direct sellers cannot offer the best product to serve all needs). And they make such massive charges that they can afford it anyway!

Ms Knight is quoted in New Model Adviser® (20th July 2009) as saying that “I haven’t found people who … are in a different place to (i.e. disagree with) us” Well I have some advice for her; try talking with professional independent financial advisers and planners … and welcome to the real world.

When it comes to looking after our retirement planning and investments, we have to look after ourselves and there can be little doubt that vigilance and professional advice are essential. If you are wondering what to do contact Robert Bruce Associates for individual assistance.

NOTHING IN THIS ARTICLE SHOULD BE TAKEN AS GIVING INDIVIDUAL FINANCIAL ADVICE.