Why you can’t trust advice from the financial watchdog
A MONEY Mail investigation has exposed serious flaws in a free financial advice service being backed by the Government.
Blunders by the Money Advice Service — set up by city watchdog, the Financial Services Authority — risk leaving millions of cash-strapped Britons out of pocket if they call or visit its website and rely on the information.
And some of its face-to-face advice sessions are run by a company where several employees have been investigated for fraud.
Our investigation into the Money Advice Service, which bank customers pay for indirectly through a levy, has uncovered:
AN ERROR in its savings comparison tables that hides the best rates;
ILL-INFORMED staff doling out incorrect information on pension charges;
USE of face-to-face advisers from A4e — the welfare-to-work agency where some employees were arrested in a fraud inquiry.
The Money Advice Service was created to provide free basic money help for families. Anyone baffled by pensions, savings, mortgages or debt can call or visit its website for simple answers.
But an oversight in its savings rate tables threatens to lay waste to the nest-eggs of savers.
The tables hide Britain’s very best deals because they have a bonus, and compare only the underlying rate offered. For example, Santander has a 3.3 pc instantaccess Isa, but this is overlooked because it includes a short-term bonus (now commonplace).
Nationwide offers 4.25 pc to its current account customers, but doesn’t feature. Instead, the Money Advice Service tables tell savers the best tax-free, easy-access Isa rate over 12 months is Marks & Spencer’s 3 pc. But savers who funnel this year’s £5,680 Isa allowance into the M&S account rather than Santander or Nationwide can wave goodbye to up to £71 in potential interest.
Savings experts say hiding the best rates in the Money Advice comparison tables urgently needs fixing.
‘What the Money Advice Service is actually showing is what the rate will be when the bonus drops away in a year,’ says Anna Bowes, of comparison site Savings champion.
Savers are also in danger of paying over the odds for a pension due to incorrect information from the Money Advice Service call centre.
A mystery shop exercise found staff in the dark about an imminent ban on advisers creaming commission from pension sales. This inaccuracy could leave savers paying excessive hidden fees that wipe thousands off a potential retirement income.
The Money Advice Service is also using A4e to provide its face-to-face advice sessions. The A4e advisers visit businesses across the country to give budgeting tips.
But the people who get the advice — and often reveal personal details to the advisers — might not realise that a confidential internal audit report, leaked to the Daily Mail last month, found evidence of potential fraud in 13 out of 16 A4e offices.
A4e has always maintained the police investigation focused on ‘a handful’ of employees. The firm did not want to comment on its links to the Money Advice Service.
But a Money Advice Service spokesman said: ‘The activity A4e does for us is not affected (by the investigation). We are keeping the contract under review and monitoring the situation very closely.’
When asked about its savings table, the spokesman said: ‘Our comparison table aims to encourage users to focus on the long-term value of the accounts, not just the initial rate.’
She said the Money Advice Service would add a clarification to the website and is ‘looking at ways to make bonus rates more prominent’.
In response to its poor pensions advice, the spokesman said all staff undergo training and assessment — but admitted the commission ban is not yet part of the classes.
For advice on transferring Isas visit thisismoney.co.uk/transfers.