south-star

My 60 year old neighbour had a bad accident at work 4 years ago and recieved a sizeable pay off.His bank advised him to put around half into shares.As a result of the stock market downfall he's lost around 20k which as he cant work again is a lot of money to lose.
I know that banks have a legal obligation to offer "best advice".
To me,to advise a 60 year old guy who'll never work again to invest half of his money in shares is not best advice.Its too much risk at his age.
Does he have any sort of case?

Finally,who is the relevant finacial authority that deals with this.

Thanks
Paul...

AdrianFRST

http://www.fsa.gov.uk should have some relevant info on it.

Stevie

"Best" advice doesn't exist.

"Most appropriate advice given the facts" does exist but the PIA wont recognise it

To give "best" advice you need to know when somebody is going to die.

Mmmmm

Complain about everything.

The FSA keeps rasing the standard of paper work required retrospectively, so 4 years ago its a fair bet that the bank did not keep the required paper work, most salemen also cut corners or made things up.

He should attack them on the basis that he didn't want that level of risk, check for any errors on thier system regarding his information on thier factfind/know your customer forms. etc.

Complain first to the bank then the FSA.

south-star

Would they keep a record of the fact find.If they did can you request a copy?

south-star

Anyone?

ChrisB

Similar question to this morning...

Haven't all ad's in the recent years said 'the value of investments can go down as well as up?'

south-star

I dont think its as straightforward as that.

fast bloke

They should keep a record of the fact find. We have to keep it for 6 years after the END of any mortgage/investment were we give advice. You can't necessarily get to see it, but if the complaint goes to the FSA they will want to see it along with a written justification of the reasons behind the recommendation. Not sure of how the rules stood 4 years ago, but now I must generate what is termed a 'suitability letter' which is approved by both the client and by the company offering the investment. This would detail the clients risk profile and match it with the risk profile of the investment. Again, this would be kept on file for 6 years after the investment has been terminated.

First step is to write to the bank to complain that the risks were not initially made clear. See what they come back with.

Stevie

All ad's should read "the value of your investments can go down as well as plummet"

Fact find should be kept and available, and whilst, as a rule, the choice of fund is the clients, a high %age in a direct equity based fund at that age is careless to say the least.

Complain to the bank initially.

Tiggs

if he used a banks portfolio management service- as opposed to their in house financial adviser (by the way- an adviser working for a bank is like a chef working for burgerking...they may cook but they aint gonna be Gordon Ramsey) anyway, if its portfolio management the service agreement he prob signed is gonna to make it hard for him to complain- if they invested in equities on his behalf they prob did so with his signed authority (like a stockbroker not like an IFA)

T

ps- as for the "value goes up and down" small print this does not protect a firm if they provide a client with inappropriate advice based on their atitude to risk, the problem here is wheter he asked/got financial advise or just signed up for their management of his money.

Diesel

TV ads running in the States now recruiting such aggrieved people for lawyers to fight their case against the advisers...

There probably was a clause saying 'stock values can go down as well as up'. However I really dont think that money should have gone in stocks - stupid advice for a 60 yr old - or is that my hindsight?

D

camk

sorry to hi-jack but I had a mis-selling complaint rejected by TSB on the grounds that they viewed a 4/10 attitude to risk as being OK for an Equity endowment policy. I've not pushed it further to FSA but am thinking about it. Is 4/10 fairly OK for 10 year Endownment Policy usage to repay a small mortgage for essential roof repairs that was for my grandparents home. I think when I say 4/10 its faily conservative ,which was my view at the time as I didn't want it running any longer plus did not want to risk their home.

Cheers
Cammy

Tiggs

"However I really dont think that money should have gone in stocks - stupid advice for a 60 yr old - or is that my hindsight?"

errrr why? all my clients are over 60 and most have equities? a 60 year old who is right for stocks is better in them than a 20 yr old who isnt.

T

Tiggs

"However I really dont think that money should have gone in stocks - stupid advice for a 60 yr old - or is that my hindsight?"

errrr why? all my clients are over 60 and most have equities? a 60 year old who is right for stocks is better in them than a 20 yr old who isnt.

T

Diesel

Tiggs. I said that since it was a payoff for an accident that seemed to preclude any other income/working, and it wasnt 'spare' cash. I have always believed you should only gamble in equities what you can afford to lose without too much heartache. It's the fat cats, Goldman Sachs partners, brokers, advisers and investment managers that get the regular income & red Italian car - not fools like me who shove a few spare thousands in. So thanks BA, Tesco, Selfridges et all!

Tiggs

i was speaking genericaly.

Diesel

Well use the generic smiley then

south-star

Thanks for the replies

I guess my next task is to talk to him a bit more about how the interview/sale actually went and wether all the risks were properly explained.If they weren't then approach the bank and see what they have to say.

Tiggs...i will also ask him exactly what form the exposure to equities took,it may have been unit trusts,i dont know.

btw...does anyone know of any similair cases where a siuccessful complaint has been made?

Trout

iTrader: (1)

If the Fact Find is held electronically he can get a copy by applying for his data under the data protection act.

I would combine a complaint to the banking ombudsman and the FSA.

Clearly any decision will have to be justified by the bank - however the individual four years ago may well have seen equities still growing like billyho and decided this was a good thing. If this is the case - then no case.

If he was recommended to go this way then he may have a case. Four years ago there were plenty of safer products around - which given his circumstances - even in a strong equity market - would have been far better - such as a capital and income bond - or a growth bond.........guaranteed bonds would not have come to the fore as much that long ago.

Rannoch

south-star

Thats my thought Rannoch,....thanks.

JFB

Hindsight is a wonderful thing. It's 20/20 vision. Four years ago, there were very few investments around that were able to match the performance of equities/Unit Trusts at that time. If your friend made a profit, would there be a problem? This bear market has been truly savage and has redefined the term "Risk".

You don't say how much was invested ie "half in shares lost £20,000" but what was the initial investment and what was the other half invested in? The whole amount will probably be taken into consideration. Was the advice solicited by your friend or did the bank propose the idea to review his affairs?

From a procedural point of view, your friend should review his copy of the agreement paperwork noting what level of risk and investment strategy were sought eg income, balanced or capital growth. Armed with this information, if your friend still feels he received unsuitable advice then he should write to the advisor/manager of the bank where he received the original advice seeking their justification for the investments chosen. He may wish to state in his letter that the bank should treat his communication as a "formal complaint". This will then involve their Compliance Officer and will put in train an obligatory and strict process of timely correspondence addressing your friend's issues. Should that result in an unsatisfactory resolution, then the bank will have also provided your friend with the contact details of the FSA to whom the complaint can be referred. Finally, if that result is still unsatisfactory, your friend may refer his case to the Financial Ombudsman as a last resort.

That is the procedure and it is there to ensure a most thorough and objective review of cases so that a fair outcome is achieved.

I hope this helps.

Jerome

south-star

Jerome....cheers,that does help.
I think the next step is to get some more details from him about exactly the form of investment and what actually happenned.At the moment its just something he asked me about the other day.It all seems to hinge on what he told his bank regarding his acceptable level of risk.
I'll have to have a talk to him.
Thanks to everyone who replied,
Paul...

Eldar

There is too little information here to know if the advice was good or bad.

What %age of his capital was invested in equities?
What sort of equities were bought?
What alternatives were offered?

Remember that money in the bank, even as an ISA, is only going to get 4%, so his 20K would be bringing £8 a week, while losing value due to inflation.

Unless the guy needs the cash now, don't sell - the market is rising (usual warnings).

Colin.

fast bloke

Diesel - would have to agree with Tiggs - You can't say that is was bad advice until you 'Know your client' The guy may have a big pension and doesn't really need the money?

Diesel

Fair point Fasty, I just went on facts I saw posted. My retired Dad's lost much more cash than the little I lost (well excluding my 'ex'-pension)- so it is a bit of a sore point with me, and he needed the cash having no income...

D

south-star

Okay....i spoke to him again yesterday,my instinct is that he knew the risks when he invested the money as he doesn't seem too bothered about losing it.He also said his wife commented at the fact find "go for it" when the risk was pointed out.
He's going to complain anyway,maybe the bank might give him some compensation,but i doubt it.

Thanks for the advice anyway.

..

Tiggs

"He's going to complain anyway"

complain about what? complain that he asked for something...got it....realised he'd made a mistake and so look to pass the buck elsewhere?

typical of ppl to not be able to hold their hand up to their own errors but be quick to point out errors of others.

Apparition

There's a very good section in the Financial section of the mail on Sunday (I think ), deals with this sort of thing. For the record , I too lost £30,000 due to 11/9 and some investments advised by a FA. I was a tad upset to say the least. But I was warned that the investments could go down as well as up. AND, they were classed as low risk too. Thank gawd I didn't go for high risk ! Suffice to say, Financial advisors now sit beside estate agents and lawyers in the hall of the hated.

south-star

Tiggs......he told me Lloyds rang him up constantly when they realised he had over 100k in his current account and he does feel he was pressurised into investing in equities.Of course in the end the small print says he takes the risk but he was assured it was the right thing to do.

Its not always a black and white issue.