Esther Shaw: Advisers lead consumers up the garden path

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Ever thought you'd hear about an undercover investigation into financial advisers? It sounds a strange sort of probe but consumer body Which? has conducted one and its conclusions are alarming.

Most of us need help from advisers at some stage in our lives, particularly with our more complex financial decisions. So love them or hate them, we can't live without them.

It is worrying, then, that Which? should find that two- thirds of financial advisers are failing to give sound guidance.

In its probe, it found that bank and building society advisers "tied" to a limited range of products were the worst offenders, with just 16 per cent passing all the "benchmarks" for good advice. Further, nearly half of the tied advisers visited misled researchers into thinking they offered a greater choice than was actually the case.

Truly "independent" financial advisers (IFAs), who have access to the whole market, generally performed better. However, fewer than half met all the minimum standards for good advice.

The report also raised concerns over "Key Facts" documents. These documents, which outline the service provided by an adviser and the costs, were introduced by the Financial Services Authority (FSA) to help consumers shop around between different firms. But Which? said a third of advisers broke FSA rules by failing to provide the document, while over 80 per cent failed to explain its purpose. Worse, some advisers actually tried to put the researchers off reading it.

And so the list goes on.

All this flies in the face of moves to make the financial services sector more transparent. And that's no good for an industry whose reputation has been tarnished by mis-selling scandals.

The banks have defended their positions, insisting they conform to FSA guidelines. IFA bodies, on the other hand, have been more willing to concede there is room for improvement.

It is not the aim of Which? to make us turn our backs on financial advice. But what we should take from the findings is an understanding of what we can do to ensure we get guidance.

For starters, if you want to find a good IFA then you're going to have to leave the high street and do a little legwork.

Try to contact at least three fully independent advisers, and opt for one who charges upfront fees - as opposed to taking commission. That way, there will be no question marks over the adviser's motives for recommending any one particular product.

And crucially, make sure you understand what your adviser is telling you.

Whichever way you look at it, the industry needs a shake-up, and fast.

But you, the consumer, can vote with your feet for what you want: the best product recommendation from the widest possible choice of providers.