Don't trust your financial adviser the way you trust your doctor

Comment: too many financial advisers are utterly unscrupulous purveyors of financial snake oil, writes Richard Evans

Like rogue doctors, unscrupulous financial advisers should be struck off 

When we visit the doctor, we expect to have our medical problems competently diagnosed and to be offered the best means of solving them.

We are entitled to expect the same from financial advisers: expert, dispassionate appraisal of our financial problems and an offer of the most appropriate method to put them right.

Sadly, all too often it doesn’t work that way.

Instead, many financial advisers have been happy to sell the most appalling investments, tax-avoidance dodges and so on to their trusting customers as long as they themselves were promised generous commission payments from the firms that cooked up the products. It’s the equivalent of your doctor giving you quack remedies as long as they pocketed a fee from the maker.

Tax schemes were, in the days before commissions were banned, especially toxic. One I’ve heard about recently is truly shocking.
The advisers’ customers were persuaded to invest, say, £40,000 and then borrow a six-figure sum to make a total “investment” of about £200,000. The customers then became “partners” or sole traders in a “business” and were supposed to be able to claim tax relief on the entire sum.
These schemes failed spectacularly. First, the taxman was having none of it, so savers never got the promised £80,000 in tax relief. But part of the idea was that the money would be channelled into “green” investments, to qualify for the relief. Scant attention was paid to the quality of these investments, with advisers’ eyes on their double-digit commissions and the savers blinded by the promised tax relief.
In fact, the “investments” have turned out to be virtually worthless – or even outright scams.
As a final blow, the savers are now being chased for the debts they took on when they added to their own investments with borrowed money.
• Exposed: the rip-off investment 'advisers’ who cost British expats billions
The advisers who sold these schemes, which so blatantly enriched them to the detriment of their customers, should surely be pursued for mis-selling. But I hear that, in yet another twist of the knife, some customers are being subtly deterred from putting in a claim by the advisers’ stratagem of forming a “committee” to oversee what remains of the investments.
While the assets will, I suspect, prove to be more or less worthless, the existence of this “committee” to run them gives an impression of business as usual.
My advice to any savers who bought into these tax plans is: make a claim for mis-selling against your adviser as soon as possible. You will probably end up taking it to the ombudsman, and there are time limits for doing so.
The same applies to the many similar tax dodges sold by advisers.
The victims’ greed for the supposed free cash from the taxman almost certainly played a big part in their predicament. But the advisers are utterly unscrupulous purveyors of financial snake oil.
Like rogue doctors, they should be struck off.