Halifax Corporate Bonds

sinc1_2

Please can you advise me on the following situation:-

My father- in-law (aged 87) put £20,000 into Halifax corporate bonds some 10 years ago.
Through this time he says that he never received any communication from the Halifax in relation to his bonds.
He recently asked for a statement and as he is blind, he asked the contents to be read out. At this point he was told that the bonds were valued at just £5000.

Does he have any redress for wrong advice by the sales rep at the Halifax that sold this product at the time bearing in mind that he did not have an appropriate adult to assist him when taking out this policy?

Surely the Halifax have a duty of care to the elderly and vulnerable members of society when trying to sell such volatile products?

I would be interested in your comments
Many Thanks
Sinclair

Lokolo

Were the bonds giving him income?

dunstonh

Through this time he says that he never received any communication from the Halifax in relation to his bonds.

Halifax sent out statements twice a year.

Does he have any redress for wrong advice by the sales rep at the Halifax that sold this product at the time bearing in mind that he did not have an appropriate adult to assist him when taking out this policy?

Was your father mentally disabled or senile 10 years ago? A blind person doesnt necessarily need to have anyone else with them as blindness doesnt impact on the ability to understand.

Age 77 is not old and many people dont suddenly stop investing when they retire. They keep going. Often adding in death guarantees maybe but your father has lived 10 years from the initial advice given so timescale is fine.

Surely the Halifax have a duty of care to the elderly and vulnerable members of society when trying to sell such volatile products?

Corporate bond funds are not volatile (typically). They are very common investments for people who want lower risk and/or an income.

The sector average for UK corporate bonds since Dec 1989 (when the IMA classification was launched) shows a total return (with income reinvested) of 222.05%. With natural income withdrawn the return on the capital value still a healthy 69.46%. Neither scenario has resulted in any capital loss. They have outperformed cash savings. (e.g. cash with natural interest withdrawn would have 0% growth)

So, when the sector average hasnt turned in any loss in that period with growth or natural income, how has your father managed to end up with a 75% loss? It would suggest that he was either taking much larger regular withdrawals than the investment was capable of being able to cover or he has made periodic ad hoc withdrawals. Or even a combination of the two. Or perhaps he was mistaken on what he invested?

Your poll is a bit pointless to be honest as investments zig zag in value and tomorrow the price could be up or down. So any given day can see a loss or a gain. Bank/building society investments are rarely any good but you dont buy from a bank to get the best. Halifax were not that expensive. So its not a rip off either. Low quality and low cost but it was not capable of turning in a 75% loss in 10 years. Some other thing has happened. My money would be on your father withdrawing ad hoc payments or drawing out far too much on a regular basis.

Biggles

Any poll that only has two options, both of which are, effectively, in the affirmative, is plain daft.

jamesd

What happened to the income from the bonds? Was he getting it?

purch

Does he have any redress for wrong advice by the sales rep at the Halifax that sold this product

Unfortunately no he won't.

It is common Industry practice to consider a Corporate Bond Fund as Low Risk and therefore a suitable Investment for someone in their late 70's.

It is totally incorrect (as proven by this case) to consider a Fund that holds Corporate Bonds, and has has no fixed maturity as Low Risk, and shows a complete misunderstanding of what these Bonds are, how they are traded and what affects their pricing.

However, as it is accepted practice within the Industry to sell these Funds as low risk, the Industry will not consider it incorrect advice.

opinions4u

purch wrote: »

It is totally incorrect (as proven by this case) to consider a Fund that holds Corporate Bonds, and has has no fixed maturity as Low Risk, and shows a complete misunderstanding of what these Bonds are, how they are traded and what affects their pricing.

Surely Corporate Bonds can have differing risk profiles, depending on the companies involved.

It's wrong to say that a Corporate Bond cannot be considered low risk.

Equally, it's wrong to state that all Corporate Bonds are low risk, because they're not.

baby_boomer

What a stupid poll . The moderators should remove it. Losing money shouldn't allow MSE readers carte blanche to twist the truth like this.

My mother's corporate bond fund rose 12%, fell 50%+ and has since risen 65%, leaving her with a small capital loss.

But a decent overall gain when the tax free income is taken into account (at one stage it was 14% of the capital value but has now fallen to 7% due to rising capital values and falling yields.) If you take a punt on such yields in a low inflation environment it's playing with fire!

Anyone who bought an individual corporate bond [far, far more risky ] and comes onto these boards asking for the sympathy of ordinary savers is out of order and gazing up their own navel.

It's a risky investment decision. It doesn't matter that the company is a household name. It has no legal responsibility to advise its investors except by keeping them up to date via mandatory stock exchange announcements.

The OP should go and cry over his/her spilled milk elsewhere IMHO.

As others have suggested above, the yield on the bonds has continued to be paid and it has been an above inflation return, reflecting the capital risk the OP's relative took when originally investing.

sinc1 wrote: »

Through this time he says that he never received any communication from the Halifax in relation to his bonds.

If he bought Halifax Corporate Bonds through a broker, Halifax have no obligation to keep him informed.
If he bought a Halifax Corporate Bond Fund he would have received regular statements over the ten years.

purch

It's wrong to say that a Corporate Bond cannot be considered low risk

FUND is the word you missed out

Of course the Bond itself can easily be considered Low Risk, and usually is Low Risk, but it is the MATURITY of the Bond that gives it the Low Risk characteristic, and it is the being held in a Collective Fund with no maturity that removes most of that Low Risk.

Once you have a collection of Bonds held in a Fund that is traded on a daily basis and has no maturity, then Corporate Bonds should be considered medium risk at the least.

Of course expecting a poorly trained salesperson in a Bank foyer to know the first thing about the products they are 'pimping' would be asking too much.

dunstonh

For reference, my response is on the basis that he bought Halifax corporate bond fund and not a Halifax corporate bond.

I am wondering it he is mixing up Halifax shares which could easily have suffered a 75% loss.

opinions4u

dunstonh wrote: »

I am wondering it he is mixing up Halifax shares which could easily have suffered a 75% loss.

If only my loss was so little !!