ISA Selected investment Funds Cancelation.

Vellendarl

Yes Im an idiot. A very tired idiot on the day in question who was also trying to sort out many things in a short time frame, most notably updating his current cash ISA. Thats when I got pounced on by the HSBC financial advisor.

So the long and the short of it is on 25th of January, I transfered a considerable sum of money from my cash ISA into a SIF ISA managed by HSBC, along with monthly installments thereafter. the key notes for which can be found here.

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(arg unable to use links as im a new user)

goto HSBC online
Legal Information
Selected investment funds Key features

(sorry for the runabout viewing this)

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The most notable of the key features being my 30 day right to cancel.

After some much needed sleep and some time to mull over the full extent of the contract & its replacement contract (which took into acount the chancelers inflationary ISA cap rise) then some time to do some number crunching, I realised there were a few features I didnt agree with. Most notably that I invested 100% of the money and took 100% of the risk and assuming all went to plan, HSBC would take just short of 50% of the revenue generated. More if it underperformed.

It is at this point I decided this investment wasnt for me 3rd Feb After sleeping on it I then tried to contact my HSBC financial advisor. Whom I finally got hold of on the 5th Feb. Natrually he took the news I wanted to cancel the current arrangement in a rather cordial manner.
Since this time I get the distinct impresion they intend to stall this matter until after my cancelation period expires.

Therefore I have a few questions for myself and others in a similar situation.

1) How can I ensure my cancelation is carried out within the remaining (call it 15 days to be safe.)

2) How can I ensure I get my full investment back and remaining in an ISA bracket


I am pretty confident that im aware how to achieve both, however im concerned I might have got the wrong end of the stick as this is my first time in a situation like this. Therefore I am asking here to ensure im not miles wide of the mark and incase anyone can help advise on pitfalls to avoid in achieving these two goals.

xrjtg

Vellendarl wrote: »

1) How can I ensure my cancelation is carried out within the remaining (call it 15 days to be safe.)

If you've already asked to cancel then any failure to carry out your request would leave them wide open to a successful complaint. If you're concerned, put your request in writing and keep copies of all correspondence.

Vellendarl wrote: »

2) How can I ensure I get my full investment back and remaining in an ISA bracket

I'm not sure how cancellation rights interact with ISA transfers. I can say though that you shouldn't expect your initial investment back: you'll get the current value of your units, which could be more or less than you paid for them.

dunstonh

Most notably that I invested 100% of the money and took 100% of the risk and assuming all went to plan, HSBC would take just short of 50% of the revenue generated. More if it underperformed.

That doesnt make a lot of sense as it doesnt match their charging structure even at full cost (which it would be at HSBC).

Since this time I get the distinct impresion they intend to stall this matter until after my cancelation period expires.

I doubt it as the cancellation rights method bypasses the sales rep at the bank and is dealt with centrally by people who are not allowed to contact you. As unit linked funds are involved they have dealing timescale requirements and cant hold it up.

jamesd

Since this was done as a transfer the money should be returned to the ISA it came from. You aren't going to get back all of your money. You'll get back the value of the purchased units on the day they are sold.

You might be mistaking a reduction in yield number for the way the benefits are split between you, HSBC and the fund provider. the reduction in yield calculations use a pretty low base value that over-states the percentage the providers get on many investment types.

dunstonh

You might be mistaking a reduction in yield number for the way the benefits are split between you, HSBC and the fund provider. the reduction in yield calculations use a pretty low base value that over-states the percentage the providers get on many investment types.

Even lower now as the FSA has told firms to use lower projection rates on illustrations to reflect the asset class. So, say a 4% projection is used, that is 4% before charges. Not 4% after charges. Some of these projections are coming out with very low figures despite the investment fund itself having a track record that is 3 or 4 times that rate.

It is better to understate and come in better but you need to understand the illustrations and its limitations or potential quirks. if you don't understand them then its easy to misread them.

Vellendarl

Thankyou for replies, im am aware of the fact the FSA pushes them into understating the likely returns. However the fact remains based on these that even at a 7% projection after a 4% initial payment into a fund and further contributions averaging 1.8% on the total amount per year.

The plan was to invest over a 5 year period. Which even given the banks own example leaves me £4383 pounds beter off assuming i invest once a month every month to hit isa limit. Thier charges for this would total £5490. Naturally there were other factors for me arriving at the just shy of 50% figure, such as me not investing in the last year and a bit. So that calculation isnt as far wide of the mark as made out by Dunstoner (however this is likely to be as he did not have the full details of my investment). This of course assuming the Value hits its forecast of 7%.

With regards to the stalling it comment, I guess it all boils down to the "if i cant prove i did it argument" So far i had contacted the rep as this was my first point of contact/the HSBC financial advisor. My next step has been to draft a letter to the cancelation address. Id like to thank Xrjtg for his further reccomendation to write my desire to cancel down and record times and dates. As this has pretty nicely tidied this question up for me.


With regards to getting my full investment back, it appears I have a lot to learn if the below statement does not cover me in the cancelation section. Perhaps there is something major that I have missed.

:- If you cancel within the 30 day period, you will not pay any charges.

If this doesnt cover the loss element incured in the charges, ie the 4% they whack straight off you and any monthly management fee split of the year, then I dont know what would. Though am aware i could still lose some investment if the funds they are investing in bomb.

Vellendarl

Oh the ISA the money came out from was a cash ISA, thats why I dont think the money can return there from a stocks and shares one even if I canceled it in the 30 day period.

Sorry I thought i had covered that in full but was about my 3rd attempt at writting that as the previous 2 timed out

Frizer

Not 100% sure what is putting you off? Are you saying that the 153GBP commision per 5,100GBP chunk is 50% of your projected earnings in the fund?

jamesd

You might get some or all of the initial charge back, though technically that's made by the fund management companies, not them, and they get commission paid by the fund management company, not you. The annual charge of the fund management companies is charged to the fund daily so that isn't something that can be dodged unless the reverse the whole deal as being of unsuitable risk level for you, not just as a cancellation.

There's no need to pay 4% up front these days. Fund supermarkets like Hargreaves Lansdown do most funds at 0% to 0.25% initial charge.

Vellendarl

jamesd wrote: »

You might get some or all of the initial charge back, though technically that's made by the fund management companies, not them, and they get commission paid by the fund management company, not you. The annual charge of the fund management companies is charged to the fund daily so that isn't something that can be dodged unless the reverse the whole deal as being of unsuitable risk level for you, not just as a cancellation.

There's no need to pay 4% up front these days. Fund supermarkets like Hargreaves Lansdown do most funds at 0% to 0.25% initial charge.

Aye though in this case with relation to the initial fee its technically HSBC passing the money from one section of its company to another. I guess there is only one way to find out for certain.

I am well aware of the variety of alternatives to self manage, one of the larger driving factors behind my decision to abort the Managed investment.

Thankyou again all for your input, I am a lot less concerned about this now I have finnally recieved the option to cancel paperwork through that gets sent after your investment has been set up. All be it 2 weeks after the money was transfered. Time for me to set up an account for a self select to ensure i can keep the money within my ISA bracket

Vellendarl

Naturally as this is dealing with a bank they are being as slippery as a fish with regards to cancelation.


HSBC have done thier best however to stall this, so despite numerous contacts with them by phone and post. Today is the first day they have thrown a spanner in the works. 17/02/11

Up until now they have assured me that they have recieved my letter and told me not to worry as the full fee's would be refunded, however I could end up losing some of my investment if the markets had fallen and the value was lower (fair enough stops people canceling if the markets take a plunge)

The only concerning thing is when I questioned how they would handle the refund they assured my that they would transfer it back to where it came from, Ie my cash ISA. (i didnt think this was possible, but was unsure if cancelation would enable them to move the money back. please note though this was not my request, I just wanted HSBC to refund the full amount and hold it in the stocks and shares ISA wrapper as cash, or stocks with the full fee's refunded so i could transfer it)

I am unable to transfer with a straight transfer form as the cancelation refund of the charges would not be given so they need to do this first. Or I would have taken the easy option and done this already.

however today on the 17/2/11 They try to contact me with an answerphone msg meaning i have another expensive phone call to make. So they can tell me that they cant transfer the money back into a cash ISA. (no surprises there) They would like to transfer the sum back into my main account. which would entail losing my ISA bracket. They have been aware of my wish to cancel since the 5th, Courtesy of recorded delivery I also know they have had a letter confirming this since the 14th)

Not ideal, when i questioned this and the possibility of holding the investment as cash in the stocks and shares ISA they informed me that I could not. When they stated how much would be transfered to my account it was minus the fees still as I was apparently past my cancelation period. This despite thier literature clearly stating I have my 30 day period (signed on 25/1/10). Then further subsequent information telling me I had 15 days from when i recieved thier information ( a different set of literature 10/2/11)

Unhappy with this I questioned the situation with reference to the cancelation period. Now am waiting a phone call.

Now im wondering,

1) what I can do to ensure they stop wasting more time with cancelation paperwork they have already had since monday. (recorded delivery)

2) Who I can contact for further assistance. As what im now being told by HSBC clearly contradicts the contract i signed.

If there is anything more I personally can do than recording all correspondance with HSBC (times, dates, details) to ensure that I am covered if they stall until the cancelation period.