Why you should not count on 'impartial' advice from NatWest

Published 10th Feb 2009

The Times investigation finds that the bank is using its MoneySense service to push its own loans


As the financial crisis deepens and the recession bites, many households are in desperate need of help with their finances. But good advice, free from bias and unsullied by the drive to make a sale, is hard to find. Which is why, when NatWest, and its parent bank, Royal Bank of Scotland, launched its MoneySense advice service with a high-profile TV advertising campaign late last year, it appeared to be sparking a revolution.

Free and impartial personal finance advice, “not linked to endorsing or selling products”, was promised at more than 1,000 branches to everyone, including customers of other banks. However, an investigation by Times Money has discovered that the bank's claim that the advice is completely impartial and not linked to selling NatWest products does not stack up.

In a number of branches visited by Times Money reporters, the MoneySense advice reverted to little more than a sales pitch for NatWest products. Trained MoneySense advisers used the sessions to promote NatWest savings accounts, loans and mortgages, blurring the distinction between what was impartial advice and a hard sell of its latest deals. In other cases, the customer was quickly passed on to tied advisers not bound by the MoneySense promise of impartiality.

There also appeared to be worrying gaps in the advisers' knowledge of some of today's key personal finance issues, raising questions about the usefulness of the advice on offer. The Consumer Credit Counselling Service (CCCS), which was involved in training the MoneySense advisers, said that it was concerned by Times Money's evidence.

Frances Walker, of the CCCS, says: “If an advice session focuses on NatWest products, then I do not think that it could be described as impartial. NatWest may need to re-educate some staff members, who were previously involved in selling products, to emphasise that they should not push NatWest products in these sessions.”

The investigation involved six members of the Times Money team meeting advisers in branches across London. We posed as either a heavily indebted self-employed graphic designer or a wealthier first-time buyer with a sizeable deposit. In two out of three cases, when posing as a first-time buyer, we were pushed in the direction of a NatWest mortgage.

On Saturday at a NatWest branch in Stockwell, South London, a MoneySense adviser told us that NatWest mortgages were among the most competitive on the market. He did not attempt to give a mortgage quote during the guidance session, but he was keen to set up our reporter with a tied NatWest mortgage adviser.

In another advice session in Islington, North London, on Tuesday, our “first-time buyer” was told that MoneySense was available only to the poorest customers, which is not apparent in its literature. Our reporter was transferred to a sales representative and the discussion quickly turned to the mortgage and loan deals available at the bank.

There was no attempt to promote NatWest products to the reporters posing as freelance designers with £15,000 of debt, but financial experts say that some of the advice given does not stand up to scrutiny.

An adviser at a branch in Hammersmith, West London, suggested that we could take out payment protection insurance (PPI) on our credit cards. However, most PPI policies do not pay out to people who work on a freelance basis.

When one of our reporters asked whether or not he should be saving money, the adviser suggested putting money away for a year and then paying off credit card debts in a lump sum. In two branches advisers also suggested consolidating the debt into a single loan.

Ms Walker says: “We would always advise paying off debt before you start saving, particularly credit card debt. In nine out of ten cases, it is also not a good idea to consolidate loans.”

NatWest's Sense magazine, available in branches as part of the bank's campaign, blurs the line between advice and sales further. Inside the 100-page publication is useful information on budgeting and money-saving ideas alongside advertisements for NatWest mortgages, packaged current accounts and credit cards.

Lisa Colclough, of Citizens Advice, says: “There needs to be a clear dividing line between advice that claims to be impartial and product sales.”

Meanwhile, independent financial advisers have been dismayed by NatWest's use of the word impartial. Robert Sinclair, head of the Association of Independent Financial Advisers, says: “There has been a significant number of complaints from our members about this issue. The Financial Services Authority [FSA] has acknowledged our complaints and told us that it is talking to NatWest.”

The FSA refused to comment on MoneySense, but the Advertising Standards Authority (ASA) told Times Money that it has received a number of complaints about the campaign, which it is in the process of assessing. If it concludes that NatWest has broken ASA rules, it said that it will launch an investigation next week.

A NatWest spokesman said: “After a comprehensive investigation, we are satisfied that our MoneySense advisers did not offer any sales advice. In all but one case, they either flatly refused to offer sales advice or made an appointment for your reporter with a more appropriate member of staff. In one case, where regrettably product advice was given, we have already addressed this as a training issue.”

So where can you find impartial financial advice? Citizens Advice, which has branches across the UK, can provide help with many financial queries. To find your nearest branch, visit www.citizensadvice.org.uk. Alternatively, free debt advice is available from the CCCS on 0800 1381111 or National Debtline on 0808 8084000.

If you are looking for an affordable mortgage, most brokers will search the whole market. Some charge a fee of 1 per cent or more, but many do not charge. However, some banks and building societies only offer deals to customers that approach them directly, so it is worth exploring other options. Some comparison websites, such as Moneysupermarket.com and Moneyfacts.co.uk, also allow borrowers to check out the whole market before choosing specific deals.

For more detailed advice, consult a qualified independent financial adviser (IFA). You can find an IFA in your area by visiting Unbiased.co.uk, which allows you to search by postcode, by subject type or by IFA qualifications.

IFAs can accept commission on products sold to you, but many now offer the option of paying a fee fixed in advance, which means that the adviser is less likely to be swayed by products that pay the highest commission. Any commission received by advisers goes towards the agreed fee. You top up any shortfall, or receive any extra commission over and above the set fee. IFAs can also charge an upfront one-off payment, an hourly rate or a fee based on a consultation period.

Sue Whitbread, of the Institute for Financial Planners, suggests speaking to as many advisers as possible. “Don't settle for the first one you find online or in the phone book. Find someone you are comfortable with,” she says.

Source: ' Times '

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