Savings and elderly parents

cepheus

Many years ago I advised my parents to place their money in various postal bank/BS accounts which had competitive interest rates at that time. As often happens however these gradually became less attractive and they felt stressed at moving it around chasing after the best interest rates in remote accounts. So they decided it would be easier to manage in a branch account. Whilst this might not be the best financial solution it made sense for them.

This Easter I paid a visit to see my parents for a few days. During this time, my mother who deals with their financial affairs asked me to check on a particular transaction from their bank. After looking, I noticed they had around £11 000 languishing in a Halifax Liquid gold account. Whilst I was aware that they had this account, the amount concerned me as it is a significant fraction of their savings and of course this is one of the worst paying accounts on the High St. They also have no need for instant savings above a few thousand pounds at most.

I convinced my Mother to take a trip down to the Halifax with me to see what could be done about this. We arranged a meeting with one of the staff on duty. During this meeting it emerged that she has had a previous meeting with a tied financial advisor who convinced her to place some of their savings in some sort of Halifax investment bond for which the advisor gets commission. However, the person who we were speaking to could not tell me anything about it as she was not a qualified advisor and the financial advisor had moved onto another branch. She simply said that my Mother must have all the paperwork and this would make it clear. This came as something of a surprise to me as my parents had always been adverse to the more complicated financial products and the slightest risk. Also during this meeting we all agreed that some of the £11000 could be placed in a Halifax cash ISA at 4%, hardly the best interest rate around for their circumstances, but far better than the Liquid Gold account. My Mother seemed to feel comfortable with this account having a cash ISA already, and the money can still be accessed anytime in an emergency, so it seems likely that £6000 (for 2 people) will be placed in this.

I suggested that some or all of the remaining Liquid Gold account could be changed to a more modern cheque account earning more interest, however the member of staff said that some older people like to see a passbook and the other high interest earning account does not provide this (a weak excuse I thought). I also suggested that some of the remaining money could be placed in a short-term bond (previous calculations suggested they did not pay tax). However, I could also see that my mother was getting stressed at all this and the member of staff said “a little every time”. My Mother also seemed to be concerned about tax and the hassle of signing forms declaring that they paid none. It didn’t seem feasible to re-examine their tax affairs at that time so I left it at that.

This is a difficult situation as it is always a compromise between the interest rate, simplicity, perceived security, tax situation, visibility and convenience, and talking of finances can easily upset them, it also looks as if I am unfairly imposing my views. Personally I feel as if the Halifax have taken advantage of an older couple, but my Mother insists this is not the case and she placed a great deal of trust in the previous advisor. I am tempted to write to the branch asking them to explain to her that money in a Liquid Gold account effectively devalues due to inflation and to explain any risks associated with the investment bond they have bought (of which I am no wiser). Then again is it worth the risk of upsetting them?

dunstonh

for which the advisor gets commission

They probably didnt. Most bank advisers are not commission paid. They are targetted and get paid bonuses. They are under a lot of pressure to hit targets though.

but my Mother insists this is not the case and she placed a great deal of trust in the previous advisor.

Even though the product sold could be classed as a mis-sale with the right letter written?

I am tempted to write to the branch asking them to explain to her that money in a Liquid Gold account effectively devalues due to inflation and to explain any risks associated with the investment bond they have bought (of which I am no wiser). Then again is it worth the risk of upsetting them?

I'm not sure they would write to explain the risks of inflation as tied agents have to get compliance approval on virtually everything that is non-standard and in a regulated area.

I wouldnt give two hoots about upsetting the Halifax. I would be more concerned about upsetting your mum though. How would she react to being told her bond is expensive, not as tax efficient as the alternatives and poorly invested?

Jake'sGran

You do sound like a very kind son/daughter and it would be better if your Mum
would take advantage of your advice. I think you will need to convince her if you can that you are just thinking of her best interests. They may have got to a stage where dealing with financial matters is irritating and I sometimes think that, in these circumstances, it might be best for you or you and another of their offspring to have power of attorney. Do you think she would go for that. I am over 70 but still enjoy moving money about for the best interest rates. But, I can tell that I am losing a bit of my enthusiasm and will liquidate shares etc when I don't want to bother anymore.

It seems like your Mum does trust you or she would not have mentioned the poor Liquid Gold account. Maybe she doesn't want to show you all the details of the Bond that was sold to her because she doesn't fully understand it and is embarrassed. You will need her permission to get the full details of how it was sold etc. There may be a mis-selling issue here. If your parents are in their 80s I imagine they will be receiving interest gross as their tax allowances will be quite high. They should be if £11,000 is a significant part of their savings.

Being a member of an Over 60s club I have come to realise that many of my friends have no idea what to do with their savings and don't get good advice from their banks. One friend, a man in his mid 80s if having to pay for a particular medicine at £1500 a go (approx) or he will lose his sight. I wanted to bring this to the attention of the media but need him to agree.

All you can do is get Mum to let you have more involvement in their financial affairs. Can't think of anything else.

amcluesent

A tricky state of affairs, but as elderly parents cognitive faculties decline, children do have a responsibility to step in, inverting the parent/child relationship. I wouldn't trust any bonus/target driven salesman not to rip old folks off. At the end of the day, you need to be ready to assume responsibilities: http://www.guardianship.gov.uk/theservice/enduringpower.htm

EdInvestor

amcluesent wrote: »

A tricky state of affairs, but as elderly parents cognitive faculties decline, children do have a responsibility to step in, inverting the parent/child relationship.

Of course there can sometimes be a conflict of interest between the two generations. Nor are the children necessarily possessed of the right knowledge or experience about financial matters.

cepheus

Thanks for your views everyone

Yes they are over 80 and receive attendence allowance which I believe is non means tested and doesn't count towards income, but I live remotely so its difficult to get involved too much. I probably won't get into a mis-selling dispute since it will upset them.

regularsaver1

I'm afraid that the liquid gold account is really a bank account to some people.l they like their passbooks

I can't see why you what to complain, and what you feel has been mis-sold as nothing was sold?? or are you on about a separate amount to the £11'000 that you say is in the liquid gold

It seems your mother did not go ahead with what the adviser recommended. There would have been a recommendation letter which the adviser would have on file and your mother . I know there are certain rules about what investments can be done in Halifax, with your parents age.

Halifax counter staff do mention to anyone with that account about having it reviewed - but do all liquid gold customers want it reviewed?

Halifax will say that the interest rate leaflets were available, and it is customer choice to leave the money in the liquid gold or transfer to another account., of course

Regarding tax - there are no forms to fill in with Halifax. it is all verbal and they receive certificates for the gross interest

We all want the best for our family, but we need to find out what they have, what was discussed, why they have that account. Trust me I know how it is with my nan

ormus

ive just found out that my mother in law has about 5k in the liquid gold account!
im trying my best to persuade her to move it to the AL direct saver acc for example, as you say it aint easy convincing elderly peeps that they are being ripped off.
halifax sucks for misselling these accounts to the elderly.

dunstonh

halifax sucks for misselling these accounts to the elderly.

Opening of savings accounts at building societies is usually order taking and not advice. I would reckon most Liquid Gold accounts go back donkey's years. I doubt Halfaix mis-sold anything.

scottp_2

With this money, they want to put £3000 each in a Cash ISA. That leaves £6000 to play with. I would put £3000 in a Notice or Limited withdrawl account (One that either requires notice to withdraw or limits the number of withdrawls in a certain timescale), put £2000 in an Instant Access Account, and then leave the rest in a Current account to pay bill and such. With Pensions and other payments, this £1000 should hopefully remain at a constant balance.

Trying to blame the banks for this would not be the right thing to do. Trying to convince you mother is the hard part. Working in a bank i find it hard to advise elderly customers to manage their finances to improve performance on return as they are too set in their ways or scared of change.

As for the tax implications, any decent member of staff should be aware that an Inland Revenue R85 for can be filled out at time of opening (or any time for that matter) to allow interest to be paid gross of tax.

Any other questions i would be glad to help.

Thanks!

Ian_W

Good grief [shakes head in pure disbelief] the Halifax Liquid Gold account pays a miserly 0.96% AER. :mad:

The account was heavily marketed in the 80's using the actor George Cole who played Afur Daley in the cult TV series Minder and described as "A nice little earner". Well it certainly is now ... for the Halifax ... and to be perfectly blunt paints them as a right Arfur Daley outfit, chancers who take advantage of those who, given the accounts vintage, are of your parents age and still trust their banks to look after their interests.

To be perfectly honest I don't have a lot of time for the reclaim bank charges brigade because mostly they knew they'd be charged for late payments or unauthorised overdrafts but it makes my blood boil when Banks and BS's take advantage of the elderly like this. Supposedly reputable businesses showing all the scruples of dodgy roofers on a TV expose fronted by Jonathan Maitland.

There are rules against "unfair" interest rates on loans and it's about time the FSA looked at unfair rates on savings accounts which Banks and to their mutual shame some BS's let slide to trap the unwary who are often elderly or otherwise vulnerable. How about no savings account to pay less than BBR -2%?

OP I do hope you can move everything to reasonable rates and find out about this Bond they have. Probably a dodgy GEB. As for Bank Advisor's, and sorry to upset those who post on here they are looking after their employers interest and ultimately their own - not the customers.

Shame on the Halifax and others who prey on the unwary![/rant]