Ombudsman Case March 2012 re Santander Fixed Savings

Clear

Does any one have the full details of the Financial Ombudsman case in late march 2012 which was found in favour of the saver who did not receive a letter advising him of the end of the fixed period and changes in interest rates. I need to see this for a complaint I am making to the Ombudsman.

typistretired

Just search moneysavingexpert.com - not the forum -news - Savers' compensation hope after Santander bond defeat

typistretired

http://www.moneysavingexpert.com/news/banking/2012/05/savers-compensation-hope-after-santander-bond-defeat

Lanky_Bull

This is a cry for help in advance of the disappointment that is about to befall me!

In 2006 or 2007 I went into my local Abbey National (Now Santander) and saw a Screaming advert 50% Growth Plan.

I discussed this with my manager at the time - a qualified Accountant and his response in a carefree way was that "You will never get that, they are most likely pay you 7% despite the 50% growth claim"

I did not pay much attention to his "you will never get that" but concentrated my mind on the 7% thinking a 7% return year on year for 5 or 6 years is still a good deal - so I put I tidy sum in the Abbey National 50% growth plan thinking if I did not get the 50% of the amount I invested a 7% interest on the capital per year will still be a good return on investment.

I have now received a notice from Santander to say my investment is due to mature and "Based on what we know at the time of printing this letter, we estimated that at maturity you should receive your capital plus the minimum return of 6%. This figure is subject to change..."

This was exactly what I was told by my manager will happen 5 or 6 years ago before I made the investment!

After I received the letter I started making searches on the internet and found out that Sanatander was taken to FSA in 2011 or 2012 by a consumer watchdog and was fined a huge sum for not adequately explaining the growth plan and others and for not telling investors the plans are not covered by the compensation scheme.

But my question is this - if my manager told me 5 or 6 years ago that the 50% growth was an empty promise and this is about to come true - how long has this been going on?

Has anyone ever invested or know anyone who might have invested in Sanatander or any other bank's growth plan and never got the promised growth?

How can banks be allowed to device a scam (a nice little earner) to lock up investors money for 5 to 6 years pay them back a paltry sum as return on investment yet declare huge profits in the same period?

jimjames

Lanky_Bull wrote: »

How can banks be allowed to device a scam (a nice little earner) to lock up investors money for 5 to 6 years pay them back a paltry sum as return on investment yet declare huge profits in the same period?

Sadly because that was what you signed up to. Unfortunately your manager seems to have been able to see beyond the advertising blurb to what the potential worst case could be.

You also need to bear in mind that 6 years ago was the market peak prior to the recession and crash so shares have dropped and risen since then. Remember that these types of plans do not pay any dividends so all you are comparing is capital values - I bet if you check the FTSE values for then and now the result will be what you are being paid.

eskbanker

Lanky_Bull wrote: »

How can banks [...] pay them back a paltry sum as return on investment yet declare huge profits in the same period?

I think you've answered your own question there!

On your main point, what did the product Ts & Cs say about the return and in particular was there "promised growth" of 50% or were there the prominent caveats that most investors would expect about how impractical it is to give guaranteed returns, especially spectacular ones? It does seem strange to invest a tidy sum in a product based largely on the opinion of a third party, even if his guess did ultimately turn out to be better than Abbey National's....

Hominu

What you have been paid is nothing to do with what the bank has made as profit. It was an investment, and at the time in 2006 the market was healthy and big gains were being made. Then 2007 happened and everything crashed down. The market is slowly picking up again.

Considering the loss people are still suffering after buying a house (and other investments) in 2006/7 and trying to sell them now, I'm surprised your investment has made 6%. I would have expected much lower - like 2 - 3%.

If people knew the what the future held, investments would be easy.