HSBC Cancellation pitfall

KeithBS

dunstonh wrote: »

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



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.

We are getting to the point here. It is not that there is 'no other way', what you mean is there is no way. Not even 1% of the capital is protected let alone 100%. The Investing institution could reasonably put in place everything required to execute the instructions within the 14 days without pressing the commit button. The investor would have to forego any increase in share value in this period too, but beyond that I cannot see opportunity for abuse.

The rules may well have been operated in this way from day one but that does not mean that they are necessarily operating as intended. The protection seems so meagre it hardly merits a law.

Reaper

I see your point that the 14 day rule could mean the company should hold off investing the money for 14 days. The trouble is that when I buy an investment it may be because I believe (rightly or wrongly) it has reached bottom. If I am made to wait 2 weeks before they carry out my buy instruction I may have missed that opportunity.

I think it is one of those things where they can't really win. I can imagine irrate investors posting here that they had lost out on gains because of red tape if they held it back.

KeithBS

Reaper wrote: »

I see your point that the 14 day rule could mean the company should hold off investing the money for 14 days. The trouble is that when I buy an investment it may be because I believe (rightly or wrongly) it has reached bottom. If I am made to wait 2 weeks before they carry out my buy instruction I may have missed that opportunity.

I think it is one of those things where they can't really win. I can imagine irrate investors posting here that they had lost out on gains because of red tape if they held it back.

There are mechanisms for people to buy shares instantly if they want to and as far as I know no law has been passed to protect them in the 14 days thereafter and I can think of no reason why they should need protecting in those circumstances. What I think Parliament might have intended was to protect the casual or inexperienced investor (and possibly the impulsive investor) within a short and reasonable time of deciding to invest.

It's not so much that 'they can't win' more that they cannot lose.

purch

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?

Yes they did.

They did not put the protection in place so that "con artists" can rip off the Banks and Investment company's.

KingL

I think it is the case that the 14 days is a generic law that applies across all financial services (?indeed all distance-sold goods and services).

In your case (because you have bought a fast moving investment) it has left you with you a significant exposure.

I think you have suffered because the law is quite a broad one.

dunstonh

You cannot hold back an investment for 14 days just to satisfy the tiny minority that dont invest. Can you imagine how all those that miss out on growth would feel?

There are rules on how quickly investments must be made once the cheque has been written and received. If you wanted extra time to read the docs then you should have asked for it.

KeithBS

purch wrote: »

Yes they did.

They did not put the protection in place so that "con artists" can rip off the Banks and Investment company's.

Who are the con artists you refer to?

KeithBS

I am not asking for opinion on whether people should be allowed to make decisions to invest that take effect immediately nor am I in need of a better perspective from an industry insider's point of view.

The weight of opinion offered here is that the system needs to be this way but this is in no way illuminating.

No-one is addressing what legal rights are being referred to when HSBC say I have a legal right to cancel within 14 days (and go on to say they extend this right to 30 days subject to conditions). What law is governing this? Does anyone know?

dtaylor84

KeithBS wrote: »

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.

But that is precisely what your post is demanding. The point of the law is to allow you to withdraw from the contract you're entering into, without penalty (i.e. fees, etc.). It is not to protect the capital that you used to purchase a volatile investment (and now want back, up to 14 days later).

What you suggest is not a "cooling off" period, but a mandatory 14-day waiting period before people are allowed to invest in certain products! That is not the intention of the law at all.

EDIT: It turns out I got the terminology wrong. A "cooling off" period is what you are after, and does mean that your investment is not made for 7 days. The 14-day "cancellation rights" apply to situations where you don't get a "cooling off" period, or agree to waive it. At least as far as ISA Investment Trusts are concerned: see http://www.guardian.co.uk/theguardian/2001/mar/17/features.jobsmoney5

My point still stands: the law is not designed to force you to wait for a "cooling off" period, but to give you the right to freely withdraw from the contract during the "cancellation" period and get back 100% of the current value of your investment.

dunstonh

Ooops. Thanked instead of pressing quote!

No-one is addressing what legal rights are being referred to when HSBC say I have a legal right to cancel within 14 days (and go on to say they extend this right to 30 days subject to conditions). What law is governing this? Does anyone know?

It will be the conduct of business rules under section 51 of the finance act of 1995. Although it would have been in the old 1988 one as well and I think there were amendments in last years (but they applied to insurance contracts). Ignoring the year of the finance act, it comes under the conduct of business rules from in the FSA handbook