Scottish Widows Flexible Loans Trust – Trustee is the Lloyds Bank Financial Adviser – Help/Advice

Nantwichterrier01

Hi, I am a regular visitor to the forum but a first time poster so please forgive any mistakes.  I really do need some advice on this situation before I go down the costly road of legal actions.

I am the executor to my wife’s late uncle’s estate.  He was a widower and 87 years of age when he passed away in October 2019.  

In March 2007, he had a financial review meeting with two Lloyds bank financial advisers. Their advice was he needed to avoid inheritance tax and he should invest £170K into a Scottish Widows “Flexible Options Bond”.  This money would be held under a Scottish Widows Loan Trust.

At the review meeting, uncle was advised to invest £20K to avoid IHT. This amount changed during the meeting to a £170K investment.  At the time, he had no IHT liability making their advice inappropriate for his circumstances. 

Uncle was 74 at the time of this meeting and due to an accident when he was five was deaf. He made this investment on the day and with no one else present at the meeting.   

The loan trust needed two trustees, uncle appointed himself as the first trustee and one of the Lloyds bank advisers was appointed the second trustee.  

On the paperwork for the loan trusts, the Lloyds bank trustee give his home address as a branch of Lloyds bank.  The second Lloyds adviser who witnessed his signature did not give any home address.

The problem is I have no way of contacting the trustee. Lloyds bank or Scottish widows will not supply me with his home address, the paperwork only gives a branch address and the adviser did not even work at this branch. 

SW’s have advised me to contact a solicitor to remove the adviser as a trustee.  The solicitor I have spoken with tells me he will have to apply to the courts to remove him however; the court will want to know what steps have been taken to trace the trustee before they will consider replacing him as a trustee. I have to show all steps taken to locate the trustee.

SWs wrote to the adviser outlining the situation but he has not responded.  I think I have found both advisers on Linked-in and have messaged both of them outlining the situation, neither of them have responded. 

Lloyds bank have agreed that Uncle was mis-sold this investment. They also agree it was highly inappropriate for a Lloyds bank employee to be a trustee.  However, they do not appear to have any way of making the adviser perform his duties as a trustee even though he was acting on behalf of the bank and I believe still works for the bank as a financial adviser.

The investment now stands at £230K.

I have reported the matter to the Financial Ombudsman Service but have been informed it will be at least 4 months before this is allocated to a case officer.

Uncle’s beneficiaries include two local deaf charities and his best friend who is due to go into care, all would benefit from their share of uncles estate sooner rather than later.

I am not after financial compensation; I simply want to gain access to this money so I can settle his estate.

Any help or advice on how I can sort out this mess would be appreciated.

dunstonh

Uncle was 74 at the time of this meeting and due to an accident when he was five was deaf. He made this investment on the day and with no one else present at the meeting. 

If he was mentally able to undrestand what he was doing then age 74 is not a concern and nor is the fact he is deaf as long as he can lipread or understand written information.  

The loan trust needed two trustees, uncle appointed himself as the first trustee and one of the Lloyds bank advisers was appointed the second trustee. 

That is almost certainly a internal compliance breach.  Lloyds almost certainly do not allow their advisers to be trustees.  

The second Lloyds adviser who witnessed his signature did not give any home address.

That would be expected.   There is nothing wrong with that.

Lloyds bank have agreed that Uncle was mis-sold this investment. They also agree it was highly inappropriate for a Lloyds bank employee to be a trustee.  However, they do not appear to have any way of making the adviser perform his duties as a trustee even though he was acting on behalf of the bank and I believe still works for the bank as a financial adviser.

That outcome does not surprise me.  However, what resolution have they offered?

Any help or advice on how I can sort out this mess would be appreciated.

We need to know what Lloyds offered as a resolution.  However, ultimately, you are going to either have to wait for the free of charge to use FOS to review the case (as you appear to disagree with Lloyds resolution on the matter).  Or you pay for legal action which would probably take longer and potentially incur costs that may not get recovered.

Nantwichterrier01

Many thanks for your reply, let me answer your questions:

Uncle was 74 at the time of this meeting and due to an accident when he was five was deaf. He made this investment on the day and with no one else present at the meeting. 

If he was mentally able to undrestand what he was doing then age 74 is not a concern and nor is the fact he is deaf as long as he can lipread or understand written information.  

Lloyds complaints say; he should have been given longer to consider the advice given because he was unable to clearly understand verbal information.  He should have been given the documents to take away to read and digest and should not have made this decision on the day.

They question why initial advice was for a £20K investment that became a £170K investment.

They also agree that their was no IHT liability and he should not have been advised to cash in other investments to fund this bond. He should have left his existing investments in place.

The loan trust needed two trustees, uncle appointed himself as the first trustee and one of the Lloyds bank advisers was appointed the second trustee. 

That is almost certainly a internal compliance breach.  Lloyds almost certainly do not allow their advisers to be trustees.  
What if any actions should I take? will it help pursuing this?  Do you think this may be why he is not coming forward?

The second Lloyds adviser who witnessed his signature did not give any home address.

That would be expected.   There is nothing wrong with that.

Lloyds bank have agreed that Uncle was mis-sold this investment. They also agree it was highly inappropriate for a Lloyds bank employee to be a trustee.  However, they do not appear to have any way of making the adviser perform his duties as a trustee even though he was acting on behalf of the bank and I believe still works for the bank as a financial adviser.

That outcome does not surprise me.  However, what resolution have they offered?
Only resolution they have offered is to write to the trustee ................ 4 times !

Any help or advice on how I can sort out this mess would be appreciated.

We need to know what Lloyds offered as a resolution.  See above However, ultimately, you are going to either have to wait for the free of charge to use FOS to review the case (as you appear to disagree with Lloyds resolution on the matter).  Or you pay for legal action which would probably take longer and potentially incur costs that may not get recovered.

Thanks, initial quote for legal action was £2K plus, is this reasonable?  

dunstonh

Do you think this may be why he is not coming forward?

 He cannot contact you if you make a complaint and is still employed by them.  Lloyds take on responsibility for their employee for actions made during work.

As an employee, he is not personally responsible for the advice transactions he carried out.  Lloyds is responsible.   However, as a trustee, he does have a legal responsibility and is in breach of that.

Only resolution they have offered is to write to the trustee ................ 4 times !

That is not good enough as an outcome. Especially if he is still an employee. Have you checked the FCA register to verify if he is still working with them?

If an investment has been missold, then the resolution should be that the money should be returned (usually assuming a defined rate of return added plus statutory interest)  If the investment is higher valued than that, then that value should be returned.     If it is illiquid, then the FOS have often told the selling firm to take over ownership of the investment and resolve the issue whilst the consumer receives the money from the firm.

At worst, you would expect Lloyds to cover the legal fees and out of pocket expenses and a goodwill gesture.    You would not expect them to confirm a missale and leave it at that.

Thanks, initial quote for legal action was £2K plus, is this reasonable? 

On the whole, solicitors do generally ballpark their figures accurately.   However, it usually comes with a bunch of caveats as there is always uncertainty and often unforeseen issues that can make it rise.