David Prosser: Best advice is: don't trust advisers

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There comes a time with certain financial services scandals when people just stop being surprised by what should be shocking news. So it is with endowment mis-selling. And, now, so it is with the outrageously poor quality of financial advice in Britain.

On Wednesday, the consumer group Which? published the results of an exercise in which researchers visited 57 financial advisers around the country. Just a quarter of them passed all Which?'s benchmarks for good advice - essentially whether they complied with financial regulation rules and offered clear and decent help.

Put this another way: if Which?'s findings are representative, customers of three-quarters of Britain's financial advisers are not getting a good deal. Either their advisers are failing to comply with regulations, or they're failing to recommend the right products in the right way.

No sector emerges unscathed. Tied and multi-tied advisers (who sell products on behalf of a limited range of providers, typically at a high street bank or building society) performed worst, but independent advisers scored poorly too. Worrying stuff.

Yet the research met with a deafening silence. The Financial Services Authority (FSA), responsible for policing all those financial advisers, said not a word - although the FSA's own research, six months ago, came to much the same conclusion. The regulator warned then that the quality of financial advice in the UK was "very disappointing" and improvements were urgently required - yet nothing seems to have changed.

Comment from the Government - the Treasury, or the Department of Trade and Industry, say - was also conspicuous by its absence. Remember: this is an administration that said cleaning up the financial services industry would be one of its priorities when it took office nine years ago.

What's really shocking is that many of the industry's problems seem to have got worse. A couple of years ago, regulators dropped the so-called polarisation rules, which required financial advisers either to be tied to one product provider or be completely independent. The idea was that, as most people took financial advice from their bank, staff working in these outlets should be allowed to sell a wider range of products.

That reform has muddied already cloudy waters. Visit a financial adviser today and even before you start working out the pros and cons of what they're trying to sell you, you have to grapple with who they're actually working for. Indeed, the only thing you can be sure of - if Which?'s research is anything to go by - is that the advice you get is not to be trusted.

nnn At least the FSA has been doing something this week. Carphone Warehouse, which has for years proclaimed its independence in offering advice on all things telecoms, has been fined £245,000 for failures in sales of mobile phone insurance.

This corner of the insurance industry is highly profitable for mobile phone companies and independents such as Carphone. So it's good to see the FSA shining a light on some murky sales practices.

But Carphone's crime was in not sending out the right documentation to customers who bought the insurance. The real issue is whether the mobile phone cover on offer - and not just from Carphone - is worth buying at all; too many policies are riddled with exclusions and excesses.

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