Bank’s cynical return to investment advice

Santander will launch 225 advisers on the public through its branches by the end of March – and others will doubtless follow. Who can blame them? Current account business looks saturated, and they have to make money somewhere.

So why not have another try at investment advice? After all, they did not do too badly out of it last time, did they?

There may have been the odd mis-selling fine – but those pale into insignificance compared with the profits they made.

And there has been all sorts of encouragement from the regulator now that nasty Mr Wheatley has gone – because, in all honesty, who wants a regulator who sticks up for consumers? Much better to have one who shelves an inquiry into the culture, pay and behaviour of staff in banking.

Perhaps we can even have a return to soft touch regulation – that is, where the regulator is seen as a soft touch by the banks.

“Perhaps we can even have a return to soft touch regulation – where the regulator is seen as a soft touch by the banks” Tony Hazell

Santander’s target audience will be those with £50,000 or more to invest. Many of you will aspire to rather wealthier clients – but the problem is that if Santander and other banks grab the £50,000-plus bracket now, those investors may never cross your business’ threshold.

The problem for the investors is that they will only be sold Santander products.

So we are almost back to where we were a couple of years ago. Except that this time around we are post-RDR, so hopefully the sales process will be rather more robust than the one which saw Santander fined £12.4m for failing to provide clear information about its products and services, not carrying out checks on investments, not ensuring that new advisers were properly trained and failing to assess properly the risk appetite of its customers.

The banks will be aware of all the cash sitting in their customers’ savings accounts which could potentially be earning far more for the banks – and may just possibly deliver better returns for the customer.

Forgive my cynicism. But banks and financial advice have traditionally been a marriage made in hell.

When they backed out of the market some saw an advice gap developing; I saw an advice trap disappearing.

Perhaps they will have learned the lessons of the past and this time customers will get solid and fair, if limited, financial advice.

But in any climate in which the regulator steps back at the same time as the banks step forward, ‘caveat emptor’ must underscore every consumer decision.

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A sensible line on lending

Mark Bogard, chief executive of National Counties Building Society, recently came out fighting in favour of lending to older borrowers in an FT Adviser comment. Good for him.

National Counties is one of the few lenders to have consistently taken a sensible line on lending into retirement.

Mr Bogard commented that “income in retirement can be much more dependable than that of a younger worker, who could be laid off at short notice by his or her employer.”

Sadly many of his contemporaries first lent willy-nilly without properly checking affordability, and then reacted to regulator concerns by turning off the tap to older borrowers altogether.

That is not running a business; it is behaving like a flock of sheep.

Building society bosses are paid to assess what is best for their members and what is affordable for their borrowers.

Discrimination on the grounds of age alone is insulting to the potential borrower and could place the business at a disadvantage.

Building societies used to be led by people who understood their special place in the financial world – people like Martin Armstrong at Norwich & Peterborough and Martin Ritchley at Coventry. Mr Bogard’s comments suggest he may well be of that tradition.

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Unhappy new year

The most depressing press release I received over the festive season came from accountants BDO. Their email to me of December 29 offered: “Top tips for divorce in the new year”.

I know, I know – Christmas and summer holidays are top times for marriage breakdown, but was this really necessary while I was still digesting my Christmas pudding?

I was particularly impressed by tip number 5: “Pension and life assurance are complicated and we are in a period of changing pension rules. Tax and investment advice should be sought if they are affected by a divorce.”

There is really no pulling the wool over their eyes, is there?

Tony Hazell writes for the Daily Mail’s Money Mail section t.hazell@gmail.com