HSBC Cancellation pitfall

KeithBS

In early October 2008 I took out an 'Investment Plan' with HSBC to invest £20,000 in various unit trusts. The confirmation letter for the plan stated that I had a legal right to cancel within 14 days. I exercised that right but HSBC say I lost £3,000 in that period. According to HSBC the right to cancel refers only to the right to make them waive their 4% management fee. All other money was at risk from day one. Did parliament really pass a law to give such a limited right to cancel and are HSBC driving a coach and horses through this loophole or are HSBC just plain wrong here?:mad:

dunstonh

Nothing wrong here and no scam. Cancellation rights allows you to get your money returned without charges but subject to any investment fluctuations.

That is quite fair, reasonable and logical. If they didnt do this people could invest for the 14-30 days and then cancel if the investments go down in the short term. They could then pull out after the cancellation rights if its gone up to pocket the gain and then reinvest to stay in the 14-30 day period and start again. Quite clearly that would be daft to allow it to happen.

debbie42

It isn't just HSBC this applies to. Once you have purchased the units then you are subject to the vagaries of the stock market as to how much they fall (or rise). Otherwise anyone could purchase unit trusts and cash for the original price if the value fell within 14 days.

This is certainly clearly detailed in the t&c of my provider (Halifax). Have you checked the HSBC ones?

dunstonh

It is in the HSBC ones. In fact its one of those standard risk warnings you get in all Key Features documents under the "RISK FACTORS" section on the first page.

The HSBC one says:
If you cancel your investment within the cancellation
period, you may get back less than the amount you
originally invested if the market has fallen in that time.

KeithBS

The replies so far seem to focus on the wrong issue. HBSC confirm that you have in fact 2 rights. The first is a legal right by regulation to cancel within 14 days. The second is a similar right to cancel within 30 days provided by the contract entered into and subject to their rules. My point is this - what sort of protection was the legal right to cancel within 14 days meant to be providing for consumers. The notion of being able to invest for 14 days and then cancel if you don't like the way the market is going has nothing to do with my post.

slipp_digby

not a scam is it really?

the issue highlighted by other posters is as applicable as both rights to cancel. 14 days, 30 days? what does it ACTUALLY matter? HSBC sold you an investement which can vary in value, sometimes over very short periods?

I suggest you change the sensationalist title of your thread.

oxocubes

keithbs - I don't understand what you don't understand about the explanations given.

dunstonh

There is no 30 day cancellation period on investments in unit trust funds. The 30 days applies to a different class of product (typically those wrapped in the life and pension tax wrapper as they fall under insured contract rules rather than investment rules). However, they too are subject to daily value fluctuations.

slipp_digby

KeithBS wrote: »

I exercised that right but HSBC say I lost £3,000 in that period.

was that the reason why you cancelled, or just co-incidence?

KeithBS

slipp_digby wrote: »

was that the reason why you cancelled, or just co-incidence?

I cancelled because I had second thoughts in what I had thought to be this 'cooling off' period. HSBC certainly do extend your statutory 14 day rights to 30 days and not just for investments wrapped in life or pension wrappers.

My point is simply this - if Parliament felt the need to have a law (not a contract term freely agreed between parties) to protect the investor within 14 days of signing a contract, did they really intend for the protection to be so limited and apply only to the fees payable to the advisors involved?

dunstonh

HSBC certainly do extend your statutory 14 day rights to 30 days and not just for investments wrapped in life or pension wrappers.

The choice to go beyond the minimum 14 days is with the company. However, the same principle applies.

My point is simply this - if Parliament felt the need to have a law (not a contract term freely agreed between parties) to protect the investor within 14 days of signing a contract, did they really intend for the protection to be so limited and apply only to the fees payable to the advisors involved?

The rules are as intended. Have been since day one. There is no other way to give 100% capital protection during the cancellation period without introducing abuse.