Contacted by the bank ref poor pension advice

ivavoucher

My wife received a letter from HSBC stating that she had not received the best of advice from our HSBC financial advisor.
This is in regard to switching a pension with a value of £175,000 some 2 years ago.

A pension review consultant from the bank is calling to see her tomorrow to sort this out.

The financial advisor also tried to move a second executive pension of a higher value but was stopped by head office, reason head office gave was: 37% v 25% cash lump sum would be lost if the pension was switched.

What the man calling tomorrow does not know yet is that she was advised to go to annuity 8 month after the pension was switched, which she did. (for additional income)
The above advice was given just prior to the financial advisor leaving HSBC.

I have now moved our investments away from HSBC Portfolio management which incidentally bombed costing us £30,000 in less than a year.


I have been told that I will not be sold anything tomorrow nor given advice on pension products.

Any advice please.

Thanks.

Loughton_Monkey

ivavoucher wrote: »

My wife received a letter from HSBC stating that she had not received the best of advice from our HSBC financial advisor.
This is in regard to switching a pension with a value of £175,000 some 2 years ago.

Nothing unusual about that! Sadly, this is quite a common feature of bank 'advisors'.

ivavoucher wrote: »

What the man calling tomorrow does not know yet is that she was advised to go to annuity 8 month after the pension was switched, which she did. (for additional income)
The above advice was given just prior to the financial advisor leaving HSBC.

Don't fully understand? Am assuming you shifted it from the bank and then put it into payment?

ivavoucher wrote: »

I have now moved our investments away from HSBC Portfolio management which incidentally bombed costing us £30,000 in less than a year.


I have been told that I will not be sold anything tomorrow nor given advice on pension products.

Any advice please.

Thanks.

I can only assume they are visiting you to 'explain' the mis-selling. A review will have been 'forced' either by FSA, or more likely by the banks own internal compliance people.

However, what none of us knows is what the mis-selling relates to. I cannot believe it was in relation to a Final Salary scheme. Even a bank would not have been that stupid 2 years ago.

Best, probably, not to commit yourself tomorrow. Just act as 'horrified' as you feel fit. Ask how they propose to recompense, and then take further advice before accepting anything.

ivavoucher

Thank you for your response Loughton Monkey

Loughton_Monkey wrote: »

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Don't fully understand? Am assuming you shifted it from the bank and then put it into payment? .

There was 2 x pensions and other cash when we started using HSBC.


We were advised to invest the cash in a managed portfolio and to switch both pensions but head office would only allow one pension to be switched.

the cash in the portfolio soon took quite a dive and I expressed my concern, at this point we were advised to keep the portfolio and take both pension to annuity to raise income.

shortly after this the advisor left HSBC, he did contact us a few times trying to take us with him but we declined.

The cash in the portfolio continued to drop, the investment balance was shown every time I checked my current account online and was driving me nuts.

I was a bit upset with the losses and feel I was given bad advice on the cash investment.
I really feel as though I was pushed into taking a higher risk than suited me.
I remember filling in the assessment forms and ticking the “I will do a runner if I see my investment go down in value” box

The above has nothing to do with the meeting tomorrow, but I do intend to express my concerns.

when the cash in the portfolio lost 30k we told HSBC to close our portfolio account and we put the cash in banks accounts.

So after that we looked at cashing in the un-switched pension mainly because it gave 37% lump sum and the switched pension was supposedly in the best place possible.

On making enquiries we found we would lose 20k+ market value reduction so cashed in the switched pension instead.

dunstonh

The financial advisor also tried to move a second executive pension of a higher value but was stopped by head office, reason head office gave was: 37% v 25% cash lump sum would be lost if the pension was switched.

I had heard the FSA found the advice banks gave on pension switches was dire but I didnt realise it was that bad. I have always wondered how bank sales reps could do pension transfers given their lower advice remits.

I have now moved our investments away from HSBC Portfolio management which incidentally bombed costing us £30,000 in less than a year.

Should have gone back up again though. Most people are back to pre crash days unless it was poorly invested or you were drawing an income.

Anyway, the FSA did at thematic review of pension switches and found the advice was lacking in a number of areas. Tied sales forces in particular have been a big focus and investigations have been pre-empted by the sales companies and it looks like they have found an issue with your case. Hence why they want to discuss it and probably ask how it happened.

ivavoucher

Thank you dunstonh

dunstonh wrote: »

Should have gone back up again though. Most people are back to pre crash days unless it was poorly invested or you were drawing an income.

Yes but my problem was "the assessment of the customer’s attitude to risk" did not match the product I was sold.

I don't know how easy that is to prove but the bank have already stated regarding the pension switch,

"HSBC regret that the advice you received would appear to have fallen below the high standards we usually achieve"

I am reluctant to say it was all about the advisors commission but I am starting to wonder and my wife is certainly convinced.

jamesd

I'm assuming that by cash you don't mean cash but money invested. If you mean that the investment used was cash on deposit or cash funds my comments might be different.

Three things come to mind:

1. The risk tolerance that your wife indicated, which might well imply that cash on deposit or cash-like investments such as money market funds or only the lowest risk other investments were appropriate. The drop in value level implies that the average investment risk level would not match “I will do a runner if I see my investment go down in value”.

2. The annuity purchase worries me as well, since the reason given for doing it doesn't seem to make sense compared to switching to different investments. If it was done to reduce risk and keep the income up then it tends to correctly imply that the original sale was a mis-sale compared to leaving the money where it was, if you were happy with that.

3. Charges might be higher than the plan she switched from. This doesn't mean salesperson's commission but that the charges might be higher overall.

Three things to consider for the meeting:

1. Don't show more financial knowledge than you or she had at the time of the change, or if you do have more be certain that you explain what you knew at the time and how that differs from any greater knowledge that you have now. Your knowledge at the time of the transaction is important to what might be appropriate for you and how it should be explained.

2. Don't sign anything other than a very simple note saying that you were in when the person visited until you get second opinions on what was discussed.

3. Find out what they think happened before saying what you think happened.

The visit is probably to try to determine whether there was mis-selling and from your description it seems clear that there was and that you were provided with investments that exceeded your risk tolerance. Given your description I expect them to be trying to find suitable redress payment into a pension or annuity to put you into the position you would have been had you not purchased from them. The annuity followup might need comparison with what you could have received from the original executive pension scheme had you went for secure income from that.

I'm sure that the advisor wanted to make money. That's just not the way a mis-selling claim will be resolved, so best not to focus on that, because it won't directly help your case. The risk tolerance is the easy win.

dunstonh

I am reluctant to say it was all about the advisors commission but I am starting to wonder and my wife is certainly convinced.

It is a bank sales force. Whilst they do not directly get the commission, they get targets and bonuses based on sales. If they dont get targets they can be sacked. So, no need to be reluctant about it. Bank advisers are not in it for long haul servicing. They are in it for the selling and then moving on to the next person. This is why banks have so many mis-sales.

ivavoucher

jamesd wrote: »

Given your description I expect them to be trying to find suitable redress payment into a pension or annuity .

Yes this is what he has already told me over the telephone.
He has also told me he only deals with pensions but will point me in the right direction regarding problems with other investments.

Thank you all for your help.

ivavoucher

It turns out that the meeting today was not about returning our losses, just refund fees that were not explained to us prior to the switch.

Who would be the best people to contact for help in establishing if I have a legitimate claim against HSBC.

Thank you

magpiecottage

ivavoucher wrote: »

It turns out that the meeting today was not about returning our losses, just refund fees that were not explained to us prior to the switch.

That is normal - what they are doing is reimbursing you for the difference between what you will pay in charges over the life of the new policy and what you would have paid with the old one. The rest is simply a matter of investment performance.

ivavoucher wrote: »

Who would be the best people to contact for help in establishing if I have a legitimate claim against HSBC.

Just write to the bank and say the policies were more risky than you were willing to accept.

They will have to investigate and if necessary you can then take them to the Financial Ombudsman Service - no charge to you.

ivavoucher

I wanted to post an update because the whole matter was concluded today.

Three months ago we accepted £10,000 compensation for losses on the pension and today - whoopee! We have accepted just over £54,000 for unsuitable financial advice, calculated on the basis if we had not followed the advice.

Happy Bunny:D