Children's Mutual - Foundation Growth Fund Investors please read

pould

I am trying to contact as many people as possible who have invested a child's CTF in the Children's Mutual Foundation Growth Fund. I am currently pursuing a claim with the Financial Ombudsman and a complaint with the FSA and would like to pool resources.

If you have invested in this fund for your child, please send me a private message.

pould

The Fund was merged into a new fund without any of the Children's Mutual's customers being informed. The new fund has a different fund manager, a different charging structure and a different equity structure (Class A shares as opposed to Class F in the previous fund).

There is a potential good claim for compensation via the Financial Ombudsman for possible loss of earnings (I have spoken to a Barrister this afternoon who's opinion is that it is an open and shut case) and a separate potential complaint via the FSA for a clear failure to keep its customers informed of significant changes to investments.

dunstonh

I am currently pursuing a claim with the Financial Ombudsman and a complaint with the FSA and would like to pool resources.

The FSA dont handle consumer complaints. The FOS will only intervene once your have been deadlocked by the firm you are complaining about and you disagree with their decision.

The Fund was merged into a new fund without any of the Children's Mutual's customers being informed. The new fund has a different fund manager, a different charging structure and a different equity structure (Class A shares as opposed to Class F in the previous fund).

Fund mergers are not uncommon. In this case, a merge from Insight fund to the SWIP fund (both fund houses in the same group and Lloyds were transferring assets from Insight to SWIP). SWIP took over the running of Insight funds and the CM fund was renamed from Insight Foundation Growth Fund to SWIP Foundation Growth Fund. Insight was sold by Lloyds to BNY Mellon.

You can read the template letter here: http://www.insightinvestment.com/global/documents/946969/Circular_FGl.pdf

It is normal with many plans for voting rights not to be made available to plan holders. Within a plan, you do not get the same rights as holders that have the investment directly. So, planholders would not have the right to vote and would not see the letter above.

https://ctf.thechildrensmutual.co.uk/PartnerFiles/CumberlandBuildingSociety-babybond-KeyFeatures.pdf

section 11.3
The Registered Contact may ask us to
arrange for them to attend any meeting of
shareholders in the OEIC fund, but they will
not be able to exercise any voting rights.

There is a potential good claim for compensation via the Financial Ombudsman for possible loss of earnings (I have spoken to a Barrister this afternoon who's opinion is that it is an open and shut case) and a separate potential complaint via the FSA for a clear failure to keep its customers informed of significant changes to investments.

Given the number of fund closures and mergers that go on every year, what reasons does your "barrister" think that a rule breach has occurred?

What grounds do you think that the FSA will review your complaint when that is not their role?

pould

Thanks for commenting.

The issue is not that the fund was merged to create another OEIC, the issue is that none of the clients were informed. One might have taken the view that given the fund manager was changing one would want to move one's investment.

I am quite aware that the FSA handles issues of compliance, not compensation. A complaint to the FSA would simply be logged unless others also complained. Compensation for potential loss of income would be handled by the Ombudsman.

It's very clear that TCM have completely failed in their obligation to keep their customers informed of changes to the Fund they have invested in.

Fund mergers are not uncommon. Although in this case, I believe it wasnt a closure as such but but an internal change of fund house within the Lloyds Banking group. SWIP took over the running of Insight funds and the CM fund was renamed from Insight Foundation Growth Fund to SWIP Foundation Growth Fund. Insight was sold by Lloyds to BNY Mellon. Quite logical really.

Incorrect. The old fund was managed by an entirely separate company to SWIP's parent group. The Fund was not renamed - an entirely new OEIC was created by SWIP and this was then merged with the old fund with a change in the charging structure without any of the customers of CTM being informed. Do you believe that is acceptable?

dunstonh

Sorry, I was editing bits based on info found, so my response may not be the one that you directly responded to as you replied as I was editing.

an entirely new OEIC was created by SWIP and this was then merged with the old fund with a change in the charging structure without any of the customers of CTM being informed. Do you believe that is acceptable?

Normally you would expect to be notified of a change in the charging structure of a fund or a change in the investment objectives. Those sort of things turn up all of the time. The CM planholders though get no say in the matter as they are not directly invested in the fund and dont have the same rights as those that are.

What have CM said with regards to your complaint about lack of notification? - i.e. could it just be a letter that was sent out and not received?

pould

Sorry, I was editing bits based on info found, so my response may not be the one that you directly responded to as you replied as I was editing.

Yes, I noticed! Don't worry, I'm appreciating your input.

What have CM said with regards to your complaint about lack of notification? - i.e. could it just be a letter that was sent out and not received?

Effectively, "We had no obligation to inform you".

Can you see why I'm not impressed?

dunstonh

Can you see why I'm not impressed?

yes I can see that and I agree with you from a point of view of customer service and basically how you would expect a financial services company to act when the charges change. If charge increase you do expect a letter.

However, technically, i think they are right from a legal point of view given that its within a plan and not held directly. If held directly, its a different matter. However, as anyone who holds investments on an fund supermarket or platform will tell you, when fund objectives change or charges get amended, you do normally get a notification. You dont get the vote but you do get told but its the fund supermarket/platform (plan manager) that tells you the changes. Not the fund house.

The FOS generally rule as a court would but also consider fairness (unlike a court). So, the FOS are more likely to take a view on this on your side than perhaps the courts would.

However, being realistic here, the changes only happened about 3 months ago and the cost differences are not significant. The change of fund manager is irrelevant and in itself not a notifiable event. So, what would you really be after with a complaint as the actual cost difference so far is likely to be less than the cost of a few stamps on letters going back and forth.

pould

Quite simply, it's the principle of the thing!

Reaper

pould wrote: »

Quite simply, it's the principle of the thing!

That isn't really sufficient reason to take this very far. You might win a small point at great expense if you start involving barristers.

From the sound of it:
* they have changed the fund manager - even if they kept the fund as it was they were allowed to do that.
* they have changed what it invested in - even if the kept the fund as it was they were allowed to do that (within reason).
* they have changed the charges - potentially much more serious but it practice in sounds like the difference is small.

So in the end it just boils down to them not keeping you informed? I agree that is poor customer service but I doubt I would expend very much time or money pursuing it.

On the other hand maybe we need more people like you willing to do so to improve customer service for everybody in the future.

pould

Hi Reaper,

My friendly neighbourhood barrister is simply to get a legal opinion on what the view of the relevant authorities might be. The course of action is obviously a formal complaint through the FOS and registering a concern with the FSA.

Yes, if only more people made a fuss things would change. It's not as if there's a lot of money with them (The Government's £250 with them, thousands for my son elsewhere) but I'm not going to accept a company not informing me of significant changes to the nature of an investment I've made through them.

pould

Thanks for all who have contributed to this thread. I have now settled this issue with the Children's Mutual.