Oh dear – Banks back in advice market!

Article by Phil

Further news this week confirming that Lloyds bank are re-entering the advice market. Lloyds pulled out of mainstream advice back in 2012 before RDR came into force. Now they are coming back with plans to recruit 700 new advisers (not sure where from?) and with ambition to grow their funds under management from £13 billion to £25 billion!

Some may see this as a good thing because it improves access to advice via the high street, but people should remember the way banks operated in the past. James Coney Money editor of the Times on Sunday is sceptical. In his opinion, banks always approached financial planning from the perspective of how much they could sell, rather than what the customer needed. This led to a lot of poor-quality advice last time around, for which the banks are still paying compensation and there is little reason to think it will be any different this tie around, especially given that their aspirations for the market are measured in how much they can grow “their” assets under management. We don’t know yet whether Lloyds will adopt an independent approach, but that does seem to be unlikely, so customers will be facing a tied advice arrangement and limited product range. This immediately doesn’t bode well for potential customers. On 15th February it was reported that RBS for example, has so far paid out £206 million in relation to “bad advice” provided to customers both before and after RDR.

Christina left the bank environment over 10 years ago now because she could no longer put up with their sales driven, non-client focussed approach and there is nothing to suggest that it will be different this time around, so please approach with caution!

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