Can I claim

ourbaz

My father retired 12 years ago and was given advice by his financial advisor to put the fund into the stock market and take a “salary” from this, the advice cost him £140,000 and has significantly reduced his retirement income. After a few years of seeing the fund get smaller and smaller and his financial advisor consistently telling him not to worry he switched to an annuity. He told the story to the ombudsman who agreed he would have a case but as it was over 6 years ago they couldn’t help. Does anyone know if there is another way he can claim against them as it has significantly affected his retirement.

Albermarle

Not sure about the claim aspect but seems very unusual that the fund keeps getting smaller and smaller.
There was a big stock market crash in 2008 so if he invested just before then , he was  unlucky . However since then markets have done well for the last 10 years  Can you give some more details of what the fund was and the timings ?

kinger101

Your best bet is finding negligent advice that occurred within the 6 year limitation.  But I think you need to give more specifics so that those who are FA might be able to comment on what might seem negligent versus just unlucky.

SonOf

He told the story to the ombudsman who agreed he would have a case but as it was over 6 years ago they couldn’t help
The FOS always tell people who phone that they have a case.   Its virtually their default script.      The reality is that the person answering the phone wouldnt know if he has a case or not (they are not trained or qualified to know).   However, they will never put people off unless its outside of their remit.
There is a 3 & 6 year rule.   You have to complain within 6 years of the transaction or 3 years from being reasonably aware of an issue.   Both rules have to be met to allow a timebar.    The transaction took place 12 years ago.  So, that meets the 6 year rule.  He changed to an annuity "some years" later which suggests the 3 year rule has been met.
So, it does look like the timebar could be applied correctly.

Does anyone know if there is another way he can claim against them as it has significantly affected his retirement.
What was done wrong?
I have seen a number of similar comments like these over the years and very frequently the issue wasn't the fund dropping because of investment performance.   It was dropping as the person kept taking too much out of the pension.   Often going to the maximum GAD rate which would be unsustainable for investments to cover and erosion would be expected.

So, what you describe could easily be him taking too much money out. It could be bad advice.  It could be good advice but just bad timing (12 years ago was the start of the credit crunch.  So, 2008/9 saw a large drop before going on to recover and give us the longest growth period in history - which he missed by the sounds of it).

ourbaz

Thank you all for your comments, it’s greatly appreciated, you are correct, this was around the time of the crash, but he was advised to keep the money in that fund, he was also advised at how much to take out by the ifa and told that if he took that amount out the fund shouldn’t drop at all.

Are you saying that it is now too late for him to make any claim? My belief is that it was negligent due to the fact that they had regular meetings where my father showed how much the fund was reducing and showed his concerns even though he was taking a relatively small amount, and the ifa said that he should keep the money in there and not to worry, the fund had dropped by 25% in 4 years, even though he was only taking £2000 per month.

SonOf

but he was advised to keep the money in that fund
And that is normal when a crash occurs.  What goes up comes down.  What goes down comes up.   The best option for most investors is to sit tight, wait and come out the other end.

 he was also advised at how much to take out by the ifa and told that if he took that amount out the fund shouldn’t drop at all.
Generally, IFAs tell you take out the barest minimum possible.  Those that exceed an amount that is considered sustainable, will have risk warnings in their report that your father would have been given at the time.

, the fund had dropped by 25% in 4 years, even though he was only taking £2000 per month.
The credit crunch saw the stockmarket fall 45% and took 3-4 years to recover.  A drawdown could have taken longer (as it continues to draw whilst the value is down).  
What was the fund value (approx) at the time it was placed into drawdown?

Dox

ourbaz said:

My father retired 12 years ago and was given advice by his financial advisor to put the fund into the stock market and take a “salary” from this, the advice cost him £140,000 and has significantly reduced his retirement income. After a few years of seeing the fund get smaller and smaller and his financial advisor consistently telling him not to worry he switched to an annuity. He told the story to the ombudsman who agreed he would have a case but as it was over 6 years ago they couldn’t help. Does anyone know if there is another way he can claim against them as it has significantly affected his retirement.

You say the advice 'cost him £140,000' - could you give some more precise information as to exactly how you arrived at that figure? 

JoeCrystal

More I read ourbaz's posts, the more I am starting to think that ourbaz's father was just unlucky rather than ill-advised. Besides, how much is the fund worth now, if it wasn't cashed out to buy an annuity.