If you bought a new car for your daily motorway commute to work, and discovered once you'd bought it that it wouldn't go over 30mph, you could rightly claim you were mis-sold to by the dealer - and get the product you really wanted. A mis-sold investment product isn't as simple. It might be years before you discover the problem - and by then you could have lost critical funds that you and your loved ones were relying on for the future. All because someone failed to give you suitable advice - or took the time to understand your unique circumstances, and what you wanted to achieve with your product.
Whether it's a Bond, Equity ISA or any other investment-backed savings plan, choosing where to invest a lump sum or regular savings is one of the biggest decisions we ever make. It's also, to some extent, a very emotional one. Bound up in these investments are our future hopes and plans. So naturally, when it comes to making such decisions, many of us turn to experts for advice - seeking help from trusted organisations like our banks and building societies, or a recommended IFA (Independent Financial Advisor).
Sadly, many consumers have discovered that such trust was misplaced. According to the Financial Conduct Authority (FCA), the advice investors receive should be ‘clear, fair and not misleading', and ‘suitable for the client's investment objectives'. But in many cases, the opposite has turned out to be true - and the advice has been neither transparent nor consistent with customers' needs.
You may feel that the advisor you spoke to meant well - and that it was, after all, your decision. In which case, you might be interested to know that some of the biggest and best-known banks - HSBC, Lloyds, and Barclays among them - have now been issued with hefty fines for misleading their customers. And at the same time, thousands of consumers have been left with investments that have not met expectations and that carry a much greater risk than anticipated. We believe that's wrong - and customers rightfully deserve compensation.
To give you an idea of what can happen as a result of poor advice - and how the EMCAS claims process can help right a wrong - read the investment mis-selling case study below.
Mr W (aged 48) invested £3,000 in a Stocks & Shares ISA with an investment group (let's call them ABC Investments) in 2000. When he cashed his ISA seven years later, he was in for a nasty shock. Half his investment had gone, leaving him just £1,500.
Mr W had been given poor advice. He had been recorded as having a risk rating of 3 of a scale of 1 to 5 although he had never held any investments before and was approaching retirement. It was not made clear at the time of sale that his money would be at risk.
Now although ABC agreed with our complaint, they made a compensatory offer of just £530 which didn't even cover the loss of the client's original investment.
So we rejected the offer and referred the case to the Financial Ombudsman Service (FOS) for adjudication. We made the FOS adjudicator aware that Mr W had very little spare income each month and did not have a great deal of savings and requested an increase in compensation, the adjudicator agreed with the us and requested ABC increase their offer.
The revised offer from ABC was for £2,300 however our experienced Claims Managers indentified that this offer was still below the amount that should have been paid so went back to ABC to insist it recalculates the offer.
Finally ABC re-offered £3,660, which we accepted. For Mr W, it was proof that, in a battle with a powerful organisation, you need an expert in your corner.
Original Sum invested £3,000
Value after 7 years £1,500
1st compensation offer £530
2nd offer £2,300
Accepted Compensation £3,660
Difference from 1st offer £3,130
We recommend asking yourself these questions to help identify if you may have received unsuitable financial advice about your saving and investment products.
At the point of sale did your financial adviser or the sales person involved:
- Ask about your attitude to risk, investment objective and target value?
- Discuss with you what you would do as an alternative if an investment didn't perform?
- Take into account your level of investment experience?
- Discuss alternative products with you?
- Outline the advantages and disadvantages of your product in full?