Misselling of bonds

Clint163

Hi, just wondering if anyone has been mis sold a bond. My husband sold his home in 2002 (before we were married) he moved in with me. He obviously made a profit on his home and was constantly getting bombarded with calls from the bank. Eventually after my nagging him due to the annoyances of these calls reason plus he was never in at the time of the calls (he worked till late evening) and they wouldn't even discuss what it was abou to me.. Eventually he went in and they started talking about his savings and asked him if he could put money away for a few years, husband said yes but eventually we would be looking to buy a house. He was given a bond from lloyds and it was with Scottish widows. He put 10000 into this bond. After over 4 yrs of the bond running he cashed it in. He received less than he put in. He is now in the process of logging a complaint. My question is really has anyone had a similar experience with a similar investment.

dunstonh

He is now in the process of logging a complaint. My question is really has anyone had a similar experience with a similar investment.

You havent told us anything about the investment. So, its difficult to really give any advice.

Making a loss is not grounds for complaint. So, what wrongdoing are you alleging?

There is the possibility that Lloyds could timebar the complaint too under the 3/6 year rule. 6 years from sale and 3 years from being reasonably aware of a problem (surrender could trigger the 3 year clock).

Clint163

IT was a flexible investment bond. The reason of the misselling is from the fact that firstly, he came into money so practically pestered us until he went in to see him. The money would have made more in his savings account. Plus my husband explained that he could leave the money for a few years but planned on buying a house. That itself is misselling. For over 4yrs he had this money in a bond but received less than what he put into bond.

TrustyOven

Clint163 wrote: »

IT was a flexible investment bond. The reason of the misselling is from the fact that firstly, he came into money so practically pestered us until he went in to see him.

So the normal person would have classed the pestering as harrassment and called the police. Not gone and deposited money into this thing.

Clint163 wrote: »

The money would have made more in his savings account. Plus my husband explained that he could leave the money for a few years but planned on buying a house. That itself is misselling.

How is that misselling? You seem very sure, but you need to convince us that it was actually misselling.

Did he agree to invest in this bond? You said "husband said yes".

Did he know what type of investment he was investing in? (sounds like a bond fund, so price can go up and down)
If not, why invest in it?

Clint163 wrote: »

For over 4yrs he had this money in a bond but received less than what he put into bond.

To echo dunstonh's reply: "Making a loss is not grounds for complaint."

Clint163

Don't think you can actually call the police. I am talking a call every night for weeks. My husband went with the rep recommendations. He did not request for the bond the bond was sold to him on the grounds that it would make more than his savings account. Well if that was true the savings rate for those years was about 4%. So it would have interest of 400 per year. The bond was not suitable for my husband. Why would anyone want to invest at a loss when savings account would generate more?????

Clint163

I checked on the fos websites and I know he was missold. If you can answer yes to questions,....which he can. That how I know it was missold. I only put the post up for anyone who's made similar complaints. Also by googling I managed to track down information of lloyds being fined by the fca for misselling Scottish widows bonds. So that proves I again on the hard sales they used as well as the pestering as soon as a windfall of money appeared in customers bank. They did not use the fsa rules when pushing these sales.

robber2

to have any grounds for complaint you need to produce evidence that you husband was told the bond would make more than a simple savings account. Without this your complaint will fail at the first hurdle.

Please let us know what you have as evidence.

teddysmum

He would probably have been told that this high risk investment could produce a greater interest figure, but this was because of the risk taken.

There will have been paperwork stating the terms and conditions, with a mention that the value could rise or fall and it was up to him to read this. He was not forced to buy; he chose to do so.

Clint163

teddysmum wrote: »

He would probably have been told that this high risk investment could produce a greater interest figure, but this was because of the risk taken.

There will have been paperwork stating the terms and conditions, with a mention that the value could rise or fall and it was up to him to read this. He was not forced to buy; he chose to do so.

There probably were paperwork but no, the risks were not mentioned to him apart from a penalty charge if he surrendered it within the 5 yrs. My husband wouldn't have purchased this item if there were any mention of a loss. He isn't a gambling man. he didn't even have any investments at the time of the sale. Just his savings account. Back then we relied on the information from banks on there products. If he was a high risk taker then I could understand the product being sold to him but he wasn't.

jimjames

So he was told there was a penalty for withdrawing money before 5 years yet he did so after 4 years and got less back as a result.

How does he have grounds for a complaint?

dunstonh

he reason of the misselling is from the fact that firstly, he came into money so practically pestered us until he went in to see him.

It is possible that a complaint on that basis would have success if made within a few months of the original sale. However, time dilutes a complaint on that basis as it becomes clear that the "pestering" was not enough to complain about. The 3 year/6 year rule could be applied to that.

The money would have made more in his savings account.

irrelevant. The early cash in created a charge (probably around 2%-4% as they were not exit charge free until after year 5). Plus, investment returns always involve periods of loss. The FCA do not allow complaints about investment returns.

Why would anyone want to invest at a loss when savings account would generate more?????

Who says a savings account would generate more? The investment took place at the tail end of a negative period and the 6 years that followed were very strong years of growth. By drawing the money out earlier than 5 years, a good proportion of the loss would be self generated due to charge and had it been left in, as intended, it would likely have made far more than a savings account.

Also by googling I managed to track down information of lloyds being fined by the fca for misselling Scottish widows bonds.

Really - when? Have you a link?

Lloyds were fined for the sale of precipice bonds on sales made between oct 2000 and July 2001. Your husband was not sold a precipice bond. He was sold an onshore investment bond.

So that proves I again on the hard sales they used as well as the pestering as soon as a windfall of money appeared in customers bank.

Does not prove a thing. Different product, different timescale and a salesforce of around 3000-4000 staff. So, many different scenarios. Each case is look at on its own merits.

They did not use the fsa rules when pushing these sales.

What evidence do you have to support that allegation?

There probably were paperwork but no, the risks were not mentioned to him apart from a penalty charge if he surrendered it within the 5 yrs.

That is not actually true. The usual risk warnings appear on the illustration.
These figures are only examples and are not guaranteed - they are not
minimum or maximum amounts. What you will get back depends on how
your investment grows and on the tax treatment of the investment.

You could get back more or less than this.

All insurance companies use the same rates of growth for illustrations
but their charges vary.

Do not forget that inflation would reduce what you could buy in the
future with the amounts shown.

You also confirm that he was aware of the charges if drawn before the end of year 5. Yet he still did that.

He isn't a gambling man.

Nor are most investors.

If he was a high risk taker then I could understand the product being sold to him but he wasn't.

The investment bond caters for low risk through to high risk investors.


Basically, most of what you are saying is easily countered by Lloyds or could be timebarred. You have gone on a google search and found unrelated things and put 2 and 2 together to come up with 5. You have made a load of assumptions and are, of to be expected, suffering from memory loss.

However, all that said, there is a potential mis-sale here and it is one that you have no mentioned, despite all the other irrelevant points you raised. Tax efficiency. An investment bond appears in the tax efficiency list after ISA. So, the sale should have been a stocks & shares ISA and unit trust (for the amount that could not be put in an ISA).