As part of the project “Watchdogs for Financial Markets”, Baden-Wuerttemberg’s consumer association presented the results of a study on the question of “Do consumers receive needs-oriented investment products?”. To this end, 835 counselling interviews conducted by German consumer associations between November 2014 and October 2015 were evaluated. These consultations dealt with questions regarding altogether 3.052 financial investment products and 362 contractual offers by banks. The aim was to analyze to what extent banks take into account consumers’ needs and wishes when offering financial advisory and products.
The study concludes that:
- 95% of investment products and contractual offers did not address the needs and interests of consumers; as such the offered products were either too expensive and risky or did not match the consumer’s individual living condition and investment goals.
- Already closed pension contracts and investment schemes showed various possibilities for optimization; as such, there existed more cost-efficient and flexible alternatives for 45% of all contracts previously concluded.
These results point to the necessity of improving quality controls and customer orientation of financial consultations offered by banks and financial service providers. Dorothea Mohn, head of the financial markets team at the Federation of German Consumer Associations (vzbv), remarked the following: “Consumers cannot afford poor financial advice with regard to their pension schemes. (…) Selling financial products has to be strictly separated from offering financial advisory, where a high degree of quality has to be guaranteed by law. Furthermore, financial advice has to serve the customer’s best interest (Best-Advice) and it has to be regulated and supervised consistently.”
Further information and the report
Source: vzbv