Advice revamp 'will lead to rip-offs'

BANKS will find it easier to rip off consumers under proposed changes to the laws governing financial advice, the Consumers' Association has claimed. It said that by being allowed to sell products supplied by a range of financial services groups, the banks will create the impression they have chosen the most suitable offering for each consumer.

Existing laws classify banks as tied advisers, meaning they can sell investment products from only one provider, leaving only independent financial advisers able to offer the services of many groups.

The Financial Services Authority's three-month consultation period on the planned changes ends on Friday and most industry observers believe the proposals will be implemented.

Mick McAteer, a senior policy adviser with the Consumers' Association, said the bigger insurance companies would offer increased commissions to the banks to ensure a distribution channel for their products. 'There will be an unholy alliance of the biggest banks and the biggest insurance companies,' he said.