The bank is rolling out “simplified” face-to-face investment advice this week, initially to customers with at least £50,000 to invest.
The “standalone” service is aimed at providing advice on specific investment needs, rather than a full range of areas such as retirement and insurance planning.
HSBC is aiming to test the service for customers with £15,000 or more in cash savings later this year. The move will make the bank the first in the UK to offer branch-based investment advice to people with relatively small amounts to invest.
“Full financial advice is our core offering and is right for many customers, but others want quicker, lower cost advice for relatively simple needs,” said Caroline Connellan, head of UK wealth at HSBC.
“This is an obvious gap in the market. We believe it will help more customers make important financial decisions for themselves and their families, and help them achieve their financial goals.”
The launch by HSBC comes after Santander UK revealed at the start of this year that it was returning to the investment advice market, with a team of 225 advisers across the country, for customers with more than £50,000.
Most banks abandoned the investment advice market three years ago after strict rules as part of the Retail Distribution Review came into force and they came under pressure from mis-selling fines.
HSBC was hit with a £10.5m penalty in 2011 for mis-selling investment bonds to elderly clients. Santander was fined £12.4m for giving unsuitable investment advice to customers in its branches two years ago.
But banks are now gearing up to re-enter the market after the City watchdog clarified the definition of investment advice.
The move by the regulator is aimed at addressing the advice gap, where consumers cannot afford advice and do not have the expertise to invest without help.
This was exacerbated after the watchdog banned independent financial advisers from offering apparently “free” advice that was funded by commissions from financial product providers.
Figures from the Financial Conduct Authority show that two-thirds of retail financial products are purchased without advice, while many people with less than £100,000 to invest are going it alone when choosing pensions, investments and retirement income products.
However, some bankers have said that providing face-to-face investment advice is uneconomical below or about £50,000.
A number lenders are developing “robo-advice” as a lower cost digital alternative that would allow customers to go online and answer questions about their financial circumstances.
The bank would suggest funds in which to invest and could transact on the customer’s behalf in return for a fee.
HSBC has about 700 advisers who will deliver the standalone investment advice service. They will offer customers a selection of five funds within the bank’s asset management division. Customers will be charged fees with a 30 per cent discount to full financial planning advice.
