The Royal Banks of Scotland’s plans to replace advisers with an automated service - criticised for making advice more exclusive by union Unite - is simply one solution to the “difficult” advice gap problem, an industry expert has said.
From June, RBS and Natwest will no longer be offering face-to-face investment advice for customers with assets of less than £250,000. It will also be scrapping face-to-face protection advice completely, offering it only over the telephone.
Rob MacGregor, national finance officer at Unite, dismissed the bank’s claims that the plans would make advice more affordable.
“Rather than making advice more affordable, they are making it more exclusive,” he said. “What we’re seeing is a two-tier advice service. Most customers will now only get online or telephone advice, unless you happen to have in excess of £250,000 to invest.”
He also said recent online banking crashes meant people would not trust automated advice systems from banks. “When it comes to machines versus people, it is undoubtedly the case that dealing with online forms and automated voices is far more frustrating for customers.
“The spate of recent IT glitches across the banks, including RBS, shows how fallible this service would be.”
But Darius McDermott, managing director of Chelsea Financial Services, said providing people with lower amounts of savings with face-to-face advice was “difficult” and RBS is merely offering a solution.
“There is a two-tier advice, and you do need that sort of sum [£250,000] before it is viable to take that sort of financial advice. Advisers have a huge regulatory burden and they have to do a lot of work when giving advice,” he said, adding that robo-advice is one of the solutions trying to fill that gap.”
Mr MacGregor said that banks pushing to automate many of their services are driven more by ruthless cost-cutting than by any desire to improve its customer experience.
Publicly-owned banks like RBS have more of an obligation to provide the services customers really need, the union argued. The importance of maintaining a ‘social licence’ between banks and their customers is a point that the Bank of England has also made, MacGregor added.
Under recommendations in the Financial Advice Market Review, firms will get help from the regulator to set-up automated advice models to service consumers who have been abandoned by the existing advice system.
An RBS spokesperson said that the bank wants to help as many customers as possible invest their money in the right way for them. “The demand for face-to-face investment advice is changing and our customers increasingly want to bank with us using digital technology.
“As a result, we are scaling back our face-to-face advisers and significantly investing in an online investing platform that enables us to help a new group of customers with as little as £500 to invest.”