Share dealing account compensation

jakub85

Hi there,

Is anyone aware of some industry-wide effort to provide compensation to share dealing account holders (or for misselling complex investments) prior to 2011?

I recently closed my Halifax account which I had set up since 2009 or so. In the final closure letter I received also a cheque for a little over £1k stating that my 'knowledge of complex products was not tested appropriately by them before offering me the account' and so they will refund me all losses + any accrued interest incurred during a specific period.

Don't mind the money obviously :j but posting anyway as (1) I thought that maybe this will help someone on this forum, and (2) I am actually a stock analyst for a living, looking at banks, and I did not hear about any specific compensation scheme with respect to share dealing accounts so I am just curious if this is a limited number of cases / wide ranging / across the sector.

grey_gym_sock

that sounds like it relates to complex products, not share dealing in general. there are some investments for which you are supposed to be asked questions (about your experience, knowledge or wealth), and/or be asked to sign a disclaimer, before you can buy them. my first guess would be that halifax had mis-classified some investment, and hence accidentally let you buy it without going through that process.

jakub85

I believe you are right. It seems like they classified commodity ETFs as complex products (I remember I was playing with those and had losses to the tune of £700-800). Didn't know ETF was classified as complex but fair enough. Thanks for pointing me in the right direction. This was an expensive disclaimer for them...

dunstonh

Is anyone aware of some industry-wide effort to provide compensation to share dealing account holders (or for misselling complex investments) prior to 2011?

Complex investments tend to be bought by professional investors rather than retail investors. Professional investors have fewer rights than retail investors.

It sounds like they have not identified you correctly as a retail investor. This is a bit lucky on your part by them classing an ETF has complex. Its not but it is more advanced.

I am actually a stock analyst for a living, looking at banks, and I did not hear about any specific compensation scheme with respect to share dealing accounts so I am just curious if this is a limited number of cases / wide ranging / across the sector.

Its rare but has been seen before. You also best not let them know you are a stock analyst as they may well withdraw the offer. There was a case in the last year where Barclays got caught by similar. The outcome with the FOS came as a suprise and has led to firms reviewing their own client bank.

In your case, you are a cheap case to put right and limit their future liability.