Still failing to give good investment advice, says research

Which? said just four of the 37 branches of high street banks and building societies that were visited by its researchers as part of an undercover investigation, gave good advice on investing a lump sum.

The remaining 33 failed to pass its test, often by recommending inappropriate products without properly explaining the risks, or because they failed to get the basics of good advice right.

The researchers posed as retired savers with a 55,000 lump sum to re-invest from a maturing one-year fixed rate bond, which had paid a return of 7 per cent.

The group said 21 out of the 37 advisers suggested the researcher put some money into products referred to as "capital-guaranteed", but eight wrongly said these funds posed no risk to the funds invested.

Six advisers recommended an investment bond, but failed to adequately explain the risks involved with this complex product.

At the same time, 14 advisers did not mention the Financial Services Compensation Scheme (FSCS), which pays redress to consumers if they lose money because the firm that held it has gone under.

Only one adviser suggested the research split the money between two institutions to avoid going over the 50,000 compensation limit that is paid by the FSCS.

Peter Vicary-Smith, chief executive of Which?, said: "It's disappointing to see yet more evidence that the way many banks treat their customers hasn't improved since our taxes were used to bail them out."

A British Bankers' Association spokesman said: "Which? took a small sample and tested its views against them: this is not valid research.

"Banking is a relationship business. Banks' investment recommendations are the result of a two-way process: the advice can only be as good as the information received.

"It is unclear from Which?'s conclusions that it gave the subjects of its study an opportunity to demonstrate the care and integrity with which they approach customers."