JPMorgan Chase (NYSE:JPM) can't seem to catch a break. First, there was its infamous multi-billion dollar trading loss, then there was the United States Federal Energy Regulatory Commission's announcement it was investigating the bank over the manipulation of power prices. And if that wasn't enough, The New York Times published an article on July 2 suggesting the firm puts its interests ahead of its clients when it comes to the sale of mutual funds. Specifically, former brokers at JPMorgan say they were told to sell JPMorgan funds to clients even if there were better and cheaper options available. Anyone with a financial advisor that is employed by a bank, that sells its own funds, should think twice about the relationship. Chances are they're more interested in what they can make from you than what they can make for you.

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Bloomberg ran quite a lengthy story in March that detailed JPMorgan's success in the mutual fund industry. According to Strategic Insight, the bank is the only one among Morningstar's list of the top 10 mutual fund companies. In 2011, it achieved the highest level of sales growth as a percentage of assets of any firm with assets greater than $50 billion. Because the bank remained profitable during the financial crisis, it was able to grow its mutual fund business by 160% between 2008 and 2011, while peers like Citigroup (NYSE:C) and Morgan Stanley (NYSE:MS) have long since divested their own proprietary funds, respectively. From a business perspective, you have to give JPMorgan a tip of the hat because it's going against the grain, which probably makes it easier to differentiate yourself from other banks. However, I think this doesn't change the fact it's a real conflict of interest to be offering supposedly unbiased "financial advice" while injecting your own funds into the mix. It hardly makes for a fiduciary relationship.

SEE: Mutual Funds Introduction

Can It Happen in Canada?
As a Canadian, this article worried me deeply. Recently, while sitting down for a Father's Day dinner with family and friends, the discussion turned to the Canadian banks and the relative strength vis-à-vis those in the U.S. Now, I'm no fan of Jamie Dimon, but the conflict of interest these former JPMorgan brokers speak of might already be happening in Canada. Consider for a moment that the Investment Funds Institute of Canada (IFIC), which represents the best interests of Canadian mutual fund companies, stopped publishing statistics about the assets under management (AUM) for individual companies in early 2011. Why did the IFIC stop this practice? At the end of 2010, five of Canada's six big banks including Royal Bank of Canada (NYSE:RY) were among the top 10 for AUM. That likely hasn't changed much in the past year-and-a-half. At the same time, Canadians pay the highest mutual fund fees in the world. You don't have to be a genius to realize these two stats might be inter-related. I think the banks have so much influence in Canada that it's not a stretch to think the banks lobbied to have the format changed to improve the optics of the situation.

SEE: 5 Ways To Measure Mutual Fund Risk

The Bottom Line
So what does this all mean for JPMorgan customers? It means you're likely paying too much for your financial advice and getting too little in return. Last August, JPMorgan was required by arbitrators to pay $373 million to American Century Investments (ACI) because the bank favored its own investments over ACI's. When the bank bought ACI's retirement plan services division in 2003, it agreed to promote ACI's mutual funds. However, JPMorgan broke the agreement choosing to promote its own products instead; hence the $373 million arbitration ruling.

According to Morningstar, 42% of its funds failed to beat the category average over a three-year period. Meanwhile, its assets have been growing exponentially. JPMorgan customers suffer while advisors selling Chase Strategic Portfolios get rich. Jamie Dimon's house of shame just keeps getting worse. If I were you, I'll sell my JPMorgan mutual funds immediately.

At the time of writing, Will Ashworth did not own shares in any of the companies mentioned in this article.