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My parents were mis-sold ISA's
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Martin300
Posts: 6 Forumite
Hi,
Back in 2012 my mum and dad went into the Co-op/Britannia building society to have their interest updated on their pass books. They were subsequently directed to a sales person who talked them into putting their money in mid- to long-term ISA's (AXA Elevate ISA's) with promises of great dividends. My mum was 66 and my dad was 72 at the time of this mis-selling. They were told that there would be a charge for this, but they didn't ask and weren't told how much this fee would be. They were shocked to find out when they got home that they were charged £680 each for this service!
Recently, my mum has passed away, and we have contacted AXA to inform them of this. The initial investment amount was £10,000. We received correspondence from AXA today saying that this ISA is now worth £10,500. Bear in mind the fact that she was charged £680, and the interest that would have been made on this amount had it been left in the building society. Obviously, some daylight robbery has gone on somewhere!
There are several reasons I believe they were mis-sold:
1. They had no intentions of taking out the ISA's and were conned into taking them out, having been given dubious information on returns/dividends.
2. The fact that they were mid- to long-term investments considering they were pensioners.
3. They were not told about the £680 fee.
The questions I have are:
A. How does my dad go about making a complaint for himself.
B. How does he go about making a complaint on behalf of my recently deceased mother.
Many thanks in advance,
Martin
Back in 2012 my mum and dad went into the Co-op/Britannia building society to have their interest updated on their pass books. They were subsequently directed to a sales person who talked them into putting their money in mid- to long-term ISA's (AXA Elevate ISA's) with promises of great dividends. My mum was 66 and my dad was 72 at the time of this mis-selling. They were told that there would be a charge for this, but they didn't ask and weren't told how much this fee would be. They were shocked to find out when they got home that they were charged £680 each for this service!
Recently, my mum has passed away, and we have contacted AXA to inform them of this. The initial investment amount was £10,000. We received correspondence from AXA today saying that this ISA is now worth £10,500. Bear in mind the fact that she was charged £680, and the interest that would have been made on this amount had it been left in the building society. Obviously, some daylight robbery has gone on somewhere!
There are several reasons I believe they were mis-sold:
1. They had no intentions of taking out the ISA's and were conned into taking them out, having been given dubious information on returns/dividends.
2. The fact that they were mid- to long-term investments considering they were pensioners.
3. They were not told about the £680 fee.
The questions I have are:
A. How does my dad go about making a complaint for himself.
B. How does he go about making a complaint on behalf of my recently deceased mother.
Many thanks in advance,
Martin
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Comments
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As I understand the complaints procedure, if a complaint is upheld the aim would be to put you back into the situation had the product not been taken out.
So - £10,000 two years ago into a Co-op savings account would have earned what - 1.5% pa?
Let's assume it's two whole years:
So £10,000 + 1.5% = £10,150
£10,150 + 1.5 = £10,300
And the actual value now is £10,500. So even if mis-selling can be demonstrated I'm not sure that any compensation would be forthcoming since the situation is still better than it would have been.
You also mention that one of the purposes of these investments was to produce dividends - have there also been dividend payments?
Admittedly £680 does seem expensive, but there should be a whole swathe of paperwork detailing the charges.
Has £680 actually been charged, or was this a calculated figure if the investments were held for a number of years?IANAL etc.0 -
Sorry to hear about your mother, I've tried to answer what may be an alternative view that you may want to consider if you are submitting a complaintThere are several reasons I believe they were mis-sold:
1. They had no intentions of taking out the ISA's and were conned into taking them out, having been given dubious information on returns/dividends.
It's difficult to answer without knowing what they were told but dividends on the FTSE currently are 3.5%. That's probably double the rate on a cash ISA. Have they received income as well as the capital growth?
If they are of sound mind then it's difficult to know why they agreed to something they didn't want but I know some sales staff can be pushy.2. The fact that they were mid- to long-term investments considering they were pensioners.
Being a pensioner doesn't automatically exclude you from investments. Age 66 you could still have 20+ years of retirement ahead.3. They were not told about the £680 fee.
From the info you've given it sounds like they were told about the fee in writing. If they weren't happy they should have cancelled within the cooling off period. The fee is very big and is probably around the high side of the going rate for that kind of service from a bank, the general initial charge used to be 5%.The questions I have are:
A. How does my dad go about making a complaint for himself.
B. How does he go about making a complaint on behalf of my recently deceased mother.
Your dad should write to the bank outlining the details of his complaint including the specific reasons why he thinks he was mis-sold. I'm not sure cost of advice is grounds for it though. Hopefully someone else can advise on the way to complain for your mother, it may be that it can be done by your father too.
Things you/he should consider
1) Did he complete a risk analysis?
2) Was it explained that the investment could go down as well as up?
3) What documentation was he given at the time?
4) What misleading facts were given? (as stated in your post)
5) What proportion of their assets was it? If it was 5% then it would seem reasonable. If it was 95% of their cash being invested then that would not be.
If a cash ISA was what he wanted then he could be in a worse position now if they put him back to how it would have been. Even with the fees paid the current amount of £10,500 is probably still better than he would have got from a cash ISA so it would have grown to £11180 including fees. If it has paid income as well then he would be in a much better position as is.
If he is comfortable having the capital rise and fall then having an investment as part of a balanced portfolio would probably be a good idea. The provider (bank) might not be the best one so it could be worth transferring to a cheaper option - most fund supermarkets do not have initial charges for DIY portfolios.Remember the saying: if it looks too good to be true it almost certainly is.0 -
It is nearly always better to have money within a tax free shelter.1. They had no intentions of taking out the ISA's and were conned into taking them out, having been given dubious information on returns/dividends.
While your are painfully aware that life expectancy isn't guaranteed, a 66 year old female can reasonably expect to live for two decades. To exclude them from the potential long term growth on grounds of age would seem unfair.2. The fact that they were mid- to long-term investments considering they were pensioners.
My guess is that they didn't write a cheque and handover £680. And it wasn't deducted up front. This is a chunk of the plan charges (e.g. 1.5% a year) that would be paid to the bank.3. They were not told about the £680 fee.
The other point is that the returns made are probably higher than having left the money in a typical Co-op savings account. The basic idea of complaining is to be put back in the position you would have been in had the sale not happened. A successful complaint would mean losing some of the gains made.
He can ring them up and say "I wish to complain".A. How does my dad go about making a complaint for himself.
The same way. The executor can do it.B. How does he go about making a complaint on behalf of my recently deceased mother.
I just think that before any complaint is made you want to ensure that it's reasonable. The cost of advice will have been documented. Older people are allowed to invest. ISAs are a more tax efficient home for money than most other plans. Both plans appear to be doing better than a savings account and a successful complaint won't improve the current position.
Food for thought?0 -
I do hope that when you reach 66 that you are neither gaga and/or about to kick the bucket.
The common misconception of younger people that once you reach pensionable age, it's all over must be fought against. In Victorian times, older people may have sat in a bath chair being fed gruel; today, for most people, that's no longer true.
As others have said, the chance of a mis-sale having occurred here is slight.0 -
AXA Elevate are very good on disclosure. They not only have a charges document issued at point of sale that breaks down the charges of the platform, the adviser and the investment, they also send out a single page letter of a couple of paragraphs that only details the adviser charges. You cant miss it.
That said, if this was a building society/bank sale, then the £680 may not be a day 1 fee but an indemnified equivalent cost of advice (i.e. spread over a period but shown as an up front figure. So, it would be made up of some initial and ongoing trail - noting that it is a pre RDR case and AXA operated a bundled version and an unbundled version at that time).2. The fact that they were mid- to long-term investments considering they were pensioners.
You have a very poor view of that age group. At 66, the investments could have been in existence for another 20 or 30 years. That actually makes them potentially less risky than holding it in cash savings. 66 is not old. You tend to find that 75-80 is considered around the last times to invest money (for someone with no past investing history).1. They had no intentions of taking out the ISA's and were conned into taking them out, having been given dubious information on returns/dividends.
What evidence do you have to support that allegation? Noting that the documentation that exists will be used to decide this complaint. What is this dubious information you refer to? Is it really dubious or is it similar to your misconception of age 66 being old?
They could have been missold. However, they may not have been. They appear to have made more on the investments than they would on the ISA. So, even if a complaint was successful, there would not be any financial loss and no redress payable. ISAs are considered suitable for most people and a fairly low risk of mis-sale when using conventional investments. As long as the unit linked funds were appropriate for their risk profile and capacity for loss. You dont mention the fund(s) used. So, that is one part we cannot comment on.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0 -
I do hope that when you reach 66 that you are neither gaga and/or about to kick the bucket.
The common misconception of younger people that once you reach pensionable age, it's all over must be fought against. In Victorian times, older people may have sat in a bath chair being fed gruel; today, for most people, that's no longer true.
As others have said, the chance of a mis-sale having occurred here is slight.
I am asking for advice, not rudeness.
Please read this article to understand why I mentioned this information, particularly the part that says "the FCA said with more than half of the investments sold to people over 60".
theguardian.com/money/2013/sep/13/axa-fined-investment-isas-misselling
You'll have to copy and paste into your browser address bar because I'm apparently not allowed to post links.0 -
I do hope that when you reach 66 that you are neither gaga and/or about to kick the bucket.
The common misconception of younger people that once you reach pensionable age, it's all over must be fought against. In Victorian times, older people may have sat in a bath chair being fed gruel; today, for most people, that's no longer true.
As others have said, the chance of a mis-sale having occurred here is slight.
I couldn't agree more. At 66 DH and I were getting married and have since had 13 years of happy and - fairly - active life and have every intention of continuing for a bit longer.
There is also the point that, if the parents had not been offered this opportunity on grounds of age they could fairly have claimed age discrimination.[FONT=Times New Roman, serif]Æ[/FONT]r ic wisdom funde, [FONT=Times New Roman, serif]æ[/FONT]r wear[FONT=Times New Roman, serif]ð[/FONT] ic eald.
Before I found wisdom, I became old.0 -
What do you think the return should have been since 2012 a mere 2 years ago?
Do you believe they should have made more than £500, on each investment, in 2 years or less?
Should they have been offered a more risky investment to achieve that outcome?"If you act like an illiterate man, your learning will never stop... Being uneducated, you have no fear of the future.".....
"big business is parasitic, like a mosquito, whereas I prefer the lighter touch, like that of a butterfly. "A butterfly can suck honey from the flower without damaging it," "Arunachalam Muruganantham0 -
I detect no rudeness and think it's germaneI am asking for advice, not rudeness.
One of your key reasons for assuming a mis-sale is that investments are not appropriate for people of their age. As someone who is a lot closer to your parents age than you I can assure you that this is not the case0 -
Please read this article to understand why I mentioned this information, particularly the part that says "the FCA said with more than half of the investments sold to people over 60".
I don't have the figures to hand, but I'd expect half of those with spare money to invest to be people over 60.0
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