Banks lured up to a quarter of savers into risking their nest eggs on the stockmarket

As many as one in four savers could have been lured by banks into gambling their life savings in risky stockmarket investments, it emerged yesterday.

An investigation by the City watchdog has revealed how vulnerable customers were convinced by greedy salesmen to take big risks with cash they had put by as a nest egg.

Yesterday the Financial Services Authority demanded banks review recent sales and pay back anyone who was misled.

It could open the door to huge compensation payouts for tens of thousands of customers who are understood to have lost many millions of pounds because of bad advice.

One bank, believed to be Santander, faces hefty fines after being referred to the FSA’s special investigations unit. It is thought to have ignored previous warnings after being fined £1.5million for poor investment advice in February 2012.

The revelations marked another day of shame for banks, which are desperately trying to restore their reputations in the wake of the interest-rate rigging scandal.

Adam Phillips, chairman of the Financial Services Consumer Panel, says: ‘It is very disturbing that a quarter of customers are still getting poor advice. 

‘We are calling on the FSA to take tough action and to publicly name and shame the banks found mis-selling.’ The FSA conducted an undercover investigation at all major High Street banks between March and September last year.

It found poor or misleading advice was given in 25 per cent of cases. The failings included:
Encouraging savers to take too much risk; Convincing people to lock up money for longer than they needed to; Ignoring customers’ personal circumstances.

One in six investors was recommended a product too risky for them, and in just under half the cases, advisers failed to give the correct information.

In December, the FSA privately scolded six major High Street banks and demanded drastic improvements. 

On December 7, Santander suspended all its 880 investment advisers.

The Spanish-owned bank is understood to be entering redundancy negotiations with unions following a crunch meeting with staff in Birmingham yesterday.

However, any job cuts are unlikely to prevent serious punishment.

A spokesman for Santander said the bank had made ‘significant improvements’ since the FSA investigation last year.

He added: ‘We continue to believe it is important to offer customers access to a broad range of financial products which are suitable to their needs and individual situations, and we are working towards that objective.’

A spokesman for the British Bankers’ Association said: ‘Any examples of advisers failing to gather enough information on their customers and not recommending the right products are unacceptable. 

‘This review will help all banks to focus on retraining staff and changing processes to improve standards for customers in the future.’

2013-02-14 07:46:12

Source: http://msnoworldorder.co.uk/newsblog/1661-banks-lured-up-to-a-quarter-of-savers-into-risking-their-nest-eggs-on-the-stockmarket