Brits lack trust in advice

Alison Steed

Alison Steed

Proof of how badly banks treat their customers was evident in the Financial Conduct Authority’s high-cost credit review, which was also released last week.

It is going to prevent banks and other credit providers charging the currently extortionate fees for unauthorised overdrafts.

From April next year, there will be no higher fees on unplanned overdrafts as all lenders will have to apply the same fees as they do on arranged overdrafts.

In addition, banks will have to apply an annual interest rate to their overdrafts, so no longer will there be a ‘per day’ fee that so many banks currently charge.

In 2017, when the latest data applied for the FCA review, banks made an astonishing £2.4bn from overdrafts, with 30 per cent of that coming from unarranged fees.

That equates to £720m from unarranged overdraft fees alone. By any measure, that is an extreme amount of money.

So, when you consider the banks are making that kind of money out of their customers, it is surprising, to say the least, that a bank is one of the first places customers will think to go to get other financial products they need. Yet they continue to be.

What exactly are we doing wrong in this industry?

My feeling is that it could be as fundamental as people simply do not think of specialist advisers when they are looking for financial products and services.

Yet, you would not think of going to anyone but a mechanic to get your car fixed.

This quandary needs addressing so advisers become the first choice for consumers to get the advice they really need.

Advertising is one way, but for many good advisers the expense of this versus the reward is very questionable. How about more campaigns by the likes of Unbiased or Vouchedfor? Perhaps, that would at least help to make it clear how to find an adviser you can deal with.

Advisers need to start building their appeal more widely. That will take a long-term approach to marketing; using everything from content strategies to media engagement, along with paid search services that can help improve their profile. It might feel like a slog, but the sooner it starts, the better.

Alison Steed is a freelance journalist