Helping a friend - was her 75 year old mother given wrong advice

dubsun

Wondered if anyone could help me, I have some financial knowledge and a friend asked me to look at her mums bank account paperwork as her mum was confussed and did not know what was what.

It turns out in 2006, at the age of 75, never having invested in the stock market in her life, she was persuaded to invest around £26,000 in a unit trust investment account. This was invested in a cautious fund and auto isa every tax year.

This left her only £7000 cash savings ( not in an isa)

I have asked for a copy of the fact find.

From the reason why letter, she only wanted to invest for 5 years and wanted access to her money. The reason why letter states that she can exit without penalty and the investment is medium to long term.

I think that she was incorrectly advised, would the complaint have to be written to the bank from her or can it be from her daughter. I belive that she was the victim of a target run bank, she was told by the cashier to see the banks financial adviser as she had a large sum of money in her bank account, and not a best for customer run bank. She has no idea what she has done with her money.

Is it too late to complain as it has only come to light now, her daughter had no idea what she had done and her mum trusted the bank.

I think at 75, having never invested in the stock market, only wanting to invest for 5 years and having 75% of her money invested all add up to bad advice and mis-selling

I am waiting for the fact find before I help them write a letter of complaint

Can anyone advise me further.

Is there anything I should look for in the fact find or reason why letter.

Thanks

atush

Her daugther can write it (or you can), but it has to be signed by the mother (unless she holds POA).

dunstonh

It turns out in 2006, at the age of 75, never having invested in the stock market in her life, she was persuaded to invest around £26,000 in a unit trust investment account. This was invested in a cautious fund and auto isa every tax year.

So far, so good and nothing wrong with that.

From the reason why letter, she only wanted to invest for 5 years and wanted access to her money. The reason why letter states that she can exit without penalty and the investment is medium to long term.

That is correct. So, no problems there.

I think that she was incorrectly advised, would the complaint have to be written to the bank from her or can it be from her daughter. I belive that she was the victim of a target run bank, she was told by the cashier to see the banks financial adviser as she had a large sum of money in her bank account, and not a best for customer run bank. She has no idea what she has done with her money.

What do you think has been done wrong as you havent identified any wrong doing so far?

I think at 75, having never invested in the stock market, only wanting to invest for 5 years and having 75% of her money invested all add up to bad advice and mis-selling

Is she a senile 75 or a young 75? A cautious fund is low risk and not 100% invested in the stockmarket as you seem to think. £7000 cash left after investing is on the low side but that would depend on her spending habits. If her spending is less than income with lots of room to spare and she has a history of just having that amount sitting there and not being spent then it would be easy to justify.

At the moment, I am not saying it is right or wrong. Just that you havent really identified any wrong doing and it looks like you are trying to find reasons to complain rather than actually having reasons to complain.

pqrdef

The fact that "she has no idea what she has done with her money" waves a red flag at me. Does the bank have any ongoing responsibility for supervising this investment in any way? An IFA on trail commission presumably would. Somebody should.

dunstonh

The fact that "she has no idea what she has done with her money" waves a red flag at me.

Maybe but you are hearing this through a friend of a friends mother on a subject that probably doesnt interest her and was last talked about 6 years ago.

I have had clients where I have an email audit trail, report issued and conversations made that three months later phone up because they cant remember something. They reckon nearly 3/4 of what was said in a meeting is forgotten within weeks.

Does the bank have any ongoing responsibility for supervising this investment in any way?

No. Banks are transactional. Not servicing.

An IFA on trail commission presumably would.

No. Only if employed on servicing basis and not transactional and I doubt £26k would see many IFAs willing to offer servicing as it would not be cost effective to the investor. You would typically use a portfolio fund in this scenario which is diverse and self balancing. The OP says it is a cautious managed fund. So, that appears to have happened.

RetiredInThailand

dunstonh wrote: »

So far, so good and nothing wrong with that.

I would say that there is quite a lot wrong with directing a 75-year-old towards share-based unit trusts that probably carry a fairly substantial fee (and commission).

I'm nearly 2 decades younger than 75 but I am already at a point where bank deposits of various durations are looking much more attractive than shares. I have shares and trackers also, but nowhere near 75% of my wealth. 30% is nearer the mark. When I'm 75 (if I ever get there!) I doubt that I will have more than 10% in shares and I'm pretty sure I will not be thinking about buying unit trusts with a 5-year view. Unless perhaps they have invented the cure for death by then.

lisyloo

The fact that "she has no idea what she has done with her money" waves a red flag at me.

That doesn't mean it was bad advice.
Lots of people don't really understand finance and leave it in the hands of a professional and lots of older people forget things.

It does indeed look like the OP is looking for mis-selling simply because the elderly lady has forgotten or perhaps never understood it and trusted the professional.

She would certainly have signed something to the effect of "I have read and understand this investment".
I can't see anything that would definitely show mis-selling here and I'm afraid it looks like the daughter is looking for it perhaps because it didn't turn out great, rather than actually having good reasons for thinking it was mis-sold.

Just because an investment doesn't perfom does not mean it was mis-sold.
If that was the case, I'd be complaining about most lottery tickets I'd bought :-)

lisyloo

I'm nearly 2 decades younger than 75 but I am already at a point where bank deposits of various durations are looking much more attractive than shares.

You're attitude appears rather risk-averse to me.
That's not a criticism, but I'm saying it does not necessarily match this ladies attitude to risk or indeed the "norm".

dunstonh

RetiredInThailand wrote: »

I would say that there is quite a lot wrong with directing a 75-year-old towards share-based unit trusts that probably carry a fairly substantial fee (and commission).

I'm nearly 2 decades younger than 75 but I am already at a point where bank deposits of various durations are looking much more attractive than shares. I have shares and trackers also, but nowhere near 75% of my wealth. 30% is nearer the mark. When I'm 75 (if I ever get there!) I doubt that I will have more than 10% in shares and I'm pretty sure I will not be thinking about buying unit trusts with a 5-year view. Unless perhaps they have invented the cure for death by then.

If you are on track for being a senile 75 then that may well be right for you. However, many 75 year olds would not think the same way as you.

Also, the OP has already said that it is a cautious fund. That indicates a limited equity exposure and you yourself had said you would still hold equities at that age.

Also remember that the OP's friend's mother has already lived 6 years after taking them out. So past the typically recommended minimum of 5 years. You cant complain that she could have died as she didnt. Now, if she wasnt well at 75 and she died say 2 years later then there could be grounds for complaint there. But that did not happen.

i will repeat that I am not saying there are not grounds for complaint. Just that we havent seen anything yet to suggest there is. A couple of things could be with clarification but equally they may not be.

fairleads

dubsun wrote: »

Wondered if anyone could help me, I have some financial knowledge and a friend asked me to look at her mums bank account paperwork as her mum was confussed and did not know what was what.

It turns out in 2006, at the age of 75, never having invested in the stock market in her life, she was persuaded to invest around £26,000 in a unit trust investment account. This was invested in a cautious fund and auto isa every tax year.

This left her only £7000 cash savings ( not in an isa)

I have asked for a copy of the fact find.

From the reason why letter, she only wanted to invest for 5 years and wanted access to her money. The reason why letter states that she can exit without penalty and the investment is medium to long term.

I think that she was incorrectly advised, would the complaint have to be written to the bank from her or can it be from her daughter. I belive that she was the victim of a target run bank, she was told by the cashier to see the banks financial adviser as she had a large sum of money in her bank account, and not a best for customer run bank. She has no idea what she has done with her money.

Is it too late to complain as it has only come to light now, her daughter had no idea what she had done and her mum trusted the bank.

I think at 75, having never invested in the stock market, only wanting to invest for 5 years and having 75% of her money invested all add up to bad advice and mis-selling

I am waiting for the fact find before I help them write a letter of complaint

Can anyone advise me further.

Is there anything I should look for in the fact find or reason why letter.

Thanks

What is the current value of the investment?

RetiredInThailand

lisyloo wrote: »

You're attitude appears rather risk-averse to me.

Well, yes. I have more than enough money to see me out. All I need to do is to get a return that matches or exceeds inflation, which is something that I manage to do.
I suspect that most 75 year olds would consider themselves risk-averse also, if anyone explained to them what that means in the investment sense. Unless of course they imagine that they are going to live forever.