BUYER BEWARE!
I am writing this Informing You in a state of shock and anger. This morning I was asked to phone a friend of a client as she was concerned about the advice she received from her Bank. Now I am no great fan of banks as they have a history of acting in their own interests rather than their clients, but the following takes the biscuit.
This lady, let’s call her Jane, was told by her branch that she should see one of their advisers for a “review”. At this meeting she was told that as she was not married and had no children, her sister, who is the Executor in her Will, would have to pay a very large Inheritance Tax (IHT) bill, and as most of her estate was in property Jane needed to take out an insurance policy to fund this. At this point, I should point out that on speaking to Jane she informed me that her estate comprised a small business, her home and cash on deposit of approximately £30,000. However, the main issue is the fact that Jane made it clear to me, as she had done to the “adviser” that she intended to leave her estate to local charities with only a small portion going to her sister. The amount going to her sister was nowhere near the £325,000 IHT threshold, which means that on Jane’s death no IHT would be due.
Jane explained that she was put under a great deal of pressure to take out the policy, at a cost of £900 per month by the way, and the adviser was using heavy sales techniques such as indicating the premium quoted was going to rise if she did not sign up now, and making her feel guilty that her sister would be left to pay such a tax charge. I am sure the £12,000 or so commission the Bank would receive for this policy had nothing to do with this pressure selling!
When I confirmed to her that she had absolutely no need to take out a policy such as this she was, in her words, “relieved and elated” as she had been “worrying about this for days and it had been making her feel ill”.
Now I believe there are two issues here. Firstly, the Bank adviser was clearly incompetent, if not crooked, or both, and irrespective of which, there is no way he should be allowed to advise the general public. Secondly, it proves that even though we have had nearly 25 years of regulation which is responsible for the increasing amount of paper that has to be sent along with any advice given, it is still failing to stop “advice” such as the above being given. This is pertinent as in 2012 further changes to the regulations are planned, which to my mind will still not prevent people like Jane falling victim to the charlatans in my profession, but will no doubt increase the amount of paper that will be sent out.
For too long Banks have been pretending to have their clients' interests at heart when offering these “reviews”, when in reality they have been a means to try and get high commissions for selling inappropriate products. So the next time you get the offer of a review from your bank remember whose interests they really have at heart.
Steven Forbes
Managing Director
P.S. I suggest that if you feel any of your friends or family would benefit from this warning, please forward this to them using our 'send to a friend or colleague' box at the foot of the page.
March 2010 Facts
Markets and Managers we met last month
FTSE All Share
1 year return +46.7%
5 year return +17.8%
S&P 500
1 year return +46.6%
5 year return +0.3%
FTSE Eurofirst 300
1 year return +44.7%
5 year return -2.3%
Jupiter Merlin Worldwide (John Chatfeild-Roberts)
1 year return +37.3%
5 year return +59.0%
Martin Currie North American (David Forsyth)
1 year return +37.3%
5 year return +40.7%
Richmond Core (Mike Williams)
1 year return +45.7%
5 year return +46.5%
Schroder Multi-Manager Cautious (Andrew Yeadon)
1 year return +39.9%
5 year return +36.2%
Trojan Income (Francis Brooke)
1 year return +32.5%
5 year return +40.6%
J O Hambro UK Growth (Mark Costar)
1 year return +63.0%
5 year return +35.3%
Neptune Global Alpha (Robin Geffen)
1 year return +49.1%
5 year return +84.3%
(Source - ft.com 1 April 2010)
Best Bank Accounts
West Bromwich Building Society paying 2.60% gross available only over the telephone and postal system with instant access.
Halifax Web Saver Extra Account paying 2.8% gross available only over the internet.
(source –Moneyfacts April 2010)
