Barclays: advise caution...

jem16

whiteflag wrote: »

with respect , how do you know you can get the same work elsewhere, if you dont know what work we do.

Apologies - you are correct. I should have phrased that better. I don't know if the work is exactly the same and I'm very sure that you do a great job.

However the end product of a £100k investment can be got cheaper and may well serve the same purpose.

What I was trying to highlight was that what was fair in your eyes may be unfair in someone else's.

does that make his model right then?

No but does that make it wrong?

There is room for both business models I hope.

whiteflag_3

There is room for both business models I hope

So do I !!!!!

Myrmidon_J

nrsql wrote:

The plumber is the only one yet to have had a reply to his complaint. Barclays told him that because he held "windfall shares" worth £8,500, he was an "experienced" investor who must have known the risk he was taking.

Didn't know that receiving free shares made you experienced.

Well, quite!

There is "risk", there is "high risk" and then there is "ludicrous risk". As the article you referenced quotes:

"[The specialist] sector is for funds "outside the mainstream". The fund invests in convertibles, call options, non-investment-grade bonds and equities - hardly a core fund for the unsophisticated low-risk investor."

One client was advised to surrender three 'With Profits' bonds; these may not have performed particularly well (it's hard to tell, when they are not named), but they are at least broadly diversified. Whereas it appears that this fund is not.

jem16 wrote:

There is room for both business models I hope.

As do I.

At least with an IFA, remuneration is discussed up-front and is more varied than, say, "maximum initial commission".

dunstonh

The plumber is the only one yet to have had a reply to his complaint. Barclays told him that because he held "windfall shares" worth £8,500, he was an "experienced" investor who must have known the risk he was taking.

Didn't know that receiving free shares made you experienced.

Free shares dont stack up in the eyes of the FOS when they have reviewed complaints unless the documentation goes on to say somethng like "you have £8500 of shares and have seen these be as high as £12,000 and as low as £3,000 at various points and fully understand that investments like this are volatile and that they can go down as well as up. You were satisfied that you could accept that sort of volatility and risk on this investment". So, in other words, you have to use that information and put it in context. What you tend to find happens on upheld cases is that no context is put on the risk. Ideally you would want secondary information in there as well to cement the risk or the use of a risk profiler which asks example scenario questions where the indivdiual picks the multi-choice answers as these can also support the adviser for both giving advice as well as protecting themselves in the event of a complaint. I will cover another point on documentation after the comments below.

One client was advised to surrender three 'With Profits' bonds; these may not have performed particularly well (it's hard to tell, when they are not named), but they are at least broadly diversified. Whereas it appears that this fund is not.

And the main thing to remember is that risk is not about potential. Its about how much it can typically fall in value by. Most with profits fund may not offer good potential but their ability to drop in value is not that great and not possible with many. A WP fund with no MVR available or no MVR chargeable after a period would be considered low/medium risk but one with an MVR chargeable would be considered medium risk on par with a balanced managed fund or portfolio. This Aviva fund is coming out with higher risk than a FTSE tracker.

Back on to the risk documentation, having £8000 of shares and say £100k in a medium risk investment means that that £8000 at higher risk is effectively diluted in risk. If the person also had £100k in cash on top of that, the risk is diluted further. However, if the person has £10k of cash, £8k of shares and then £100k is moved from medium risk to high risk then that should start alarm bells ringing as no sane person is going to move the bulk of their money into high risk investments and an adviser is leaving themselves open to all sorts of potential issues if they recommend it as such.

However, it comes back to the fact that the recommendation was from a multi-tied agent. Tied agents and multi-tied reps more often than not do not have the remit to portfolio build. This means single fund (or a couple at best) tend to be what they do. We have seen that countless times on the board here when people have posted. However, if they cant portfolio build they can can only recommend funds in the risk profile they are using. that means 100% goes into that risk rating. Also, one big difference with the IFA vs tied rep side is that the IFA recommends the funds. Tied agents have it documented that you pick the funds. So, if high risk is the risk profile chosen, they will show you the high risk funds only and you pick the funds. If they only have one fund in that area that is the fund you go into. What tends to happen is that they steer somewhat but on paper its "you chose" rather than "I recommend".

dunstonh

This just posted at money marketing:

http://www.moneymarketing.co.uk/cgi-bin/item.cgi?id=184905&nl=MM_BN&dep=webops&dte=210409

Myrmidon_J

dunstonh wrote:

This just posted at money marketing...

Thanks for this.

Money_Marketing wrote:

Barclays insists that it calculated the amount each individual’s investment had underperformed against a benchmark equivalent for a balanced fund and offered to restore investors to the position they would have been in had they been invested in a balanced fund.

The trouble with this approach is that (somewhat inevitably) it is Barclays that determines the "benchmark". A close family member fell foul of this approach. They were mis-sold an investment product, which the bank acknowledged, and were offered "the position they would have been in" had they not invested... Except this position was a truly abysmal (Barclays) savings account, paying - on average - nearly 2.5% under base rate throughout the period concerned.

It is a sad fact that investment firms change their "benchmark" as often as the manager changes his shirt; therefore, I would not be at all surprised if the chosen reference point was somewhat unrepresentative.

Barclays also says it offered investors information about alternative funds and withdrawing their investments at that time.

Alternative funds... within the tied-adviser remit.

However the investors that have contacted Money Marketing insist they were never compensated for any loss, or informed of the classification error.

Again: what a surprise.

The number of 'notification', 'final settlement' or even 'complaint response' letters (i.e. anything time critical) that go missing is staggering. Of course, because they are all produced on a template, it is very easy to "reproduce" them after the event.

[/conspiracy]

Aegis

Well, I think this highlights why bank advisers in general and Barclays advisers in particular should be avoided... The fact is that these tied advisers don't do their own research into the funds and don't select them for their own reasons.

Myrmidon_J

Myrmidon_J wrote:

The trouble with this approach is that (somewhat inevitably) it is Barclays that determines the "benchmark". A close family member fell foul of this approach. They were mis-sold an investment product, which the bank acknowledged, and were offered "the position they would have been in" had they not invested... Except this position was a truly abysmal (Barclays) savings account, paying - on average - nearly 2.5% under base rate throughout the period concerned.

It is a sad fact that investment firms change their "benchmark" as often as the manager changes his shirt; therefore, I would not be at all surprised if the chosen reference point was somewhat unrepresentative.

I am vindicated!

Money_Marketing wrote:

Barclays creates own benchmark, rejects complaint

Barclays has admitted creating a "hypothetical fund" to calculate the benchmark it used to reject a client's claim for compensation after being misadvised to invest in Aviva's global balanced income fund.

...

Loanprotectionclaims.com senior partner Paul Cooper, whose firm is handling a large number of complaints from Barclay's clients, says: "It would be logical to look at sector averages to benchmark performance but Barclays created its own benchmark and decided that compensation was not due. This is absolutely appalling practice."

Full story: http://www.moneymarketing.co.uk/cgi-bin/item.cgi?id=185921&d=11&h=24&f=254

It's nice to be right.

But then, banking on Barclays screwing over its customers is the closest thing to a sure thing imaginable. I do hope that Barclays is punished severely for its deceit; however, I'm certain that the institution will remain rotten to the core.

Barclays: take one small step to being utterly shafted.

sabretoothtigger

Banks aim to make maximum profit on everything they do, no surprise there.
Even in a bad economy I'd expect banks to make money, for example the creditors of woolsworth made alot of money on the recalled loans I believe.
They are always biased to themselves, that why the market has to stay free and competitive