Mis-sold investment claim - asking for trouble?

pennanbeach

My elderly father was recently contacted by a firm offering to handle a mis-sold investment claim. I've always been suspicious of things like ppi firms in the past and initially dismissed this company also (AMK Legal). My father tells me that many years ago he invested a sum of money on the advice of the RBS, which was subsequently completely lost. I have vague memories of this happening (I was a teenager at the time). 

He has no paperwork at all relating to this, nor even a good knowledge of the times/sums involved. It's entirely possible that it was just a genuinely poor investment and that nobody was at fault. My initial reaction is that I don't want him to expose himself to a potentially predatory company. He doesn't make the best financial decisions now, especially when put on the spot by a salesperson. I understand that these kind of claims can be done yourself, but given the complete lack of information I have to work with, I doubt I would get very far.

It could be the case that anything is better than nothing however (the company is no win no fee). My main concern is, potential stupid question, would there be a situation where he could end up owing more than he was awarded? I don't know how much he lost, presumably several thousand pounds (but likely less than 10k). Are there any other sneaky fees that he could be stung for?

I try to handle his finances as much as possible, but I live abroad and it would be difficult for me to assist with this. I really worry about him getting on the phone with a pushy salesperson and being signed up to allsorts. In the past I've had to hastily cancel unnecessary services that he's been roped into ordering.

Would greatly appreciate any advice. Am I being correctly cautious or is my natural suspicion perhaps denying him a potential small payout for very little work?

[Deleted User]

Hi,

know nothing about them, but my pal google found THIS, if you look at T&Cs their cut is 48%.

masonic

As a general rule, if you get a call out of the blue, the best thing to do is hang up. If it is from a company you have a relationship with, then by all means call them back on their verified phone number. The fact your father got to the point where it appears he was discussing details of his past financial affairs with an unknown caller, suggests he is putting himself at risk of fraud, not just exploitation by a predatory company.

If your father wished to pursue a mis-selling claim against RBS, he could do so by making a complaint and if necessary referring to the Financial Ombudsman Service, for free, using the same information he'd need to provide to a claims firm. There is no need to pay anything. Based on what you have said, it is unlikely there still exists enough evidence to demonstrate he was mis-sold the product (that the risks were not explained or that it was unsuitable for his personal circumstances at the time). A claims firm is likely to drop his case pretty quickly once they realise a lot of work will need to be done by them just to establish the facts of the claim.

It's also worth factoring in what value he places on his time, not just the possible monetary costs.

Malthusian

As Masonic said, there is absolutely no reason to use a claims management company, especially one that called him out of the blue.

He is on a suckers list and should change his phone number. He is likely to get more calls along these lines. There are also services which block all calls from unrecognised numbers by default.

You don't say how long ago this was, but even by the standards of bygone days, it would be unusual for a bank to recommend an investment that could be completely lost. Maybe he was very unlucky and had a dodgy / incompetent adviser, maybe Barclays sold him an investment that fell in value and he panicked and cashed it in (so only a partial loss that memory and the passage of time has turned into a complete loss), maybe he wasn't advised at all and invested in something ultra high risk off his own bat - impossible to say.

There is a time limit to take complaints to the Ombudsman of six years after the loss or three years after you could reasonably have been aware (although the Ombudsman has been known to ignore these).

With no paperwork and no memory of what actually happened there is no prospect of a successful complaint as it stands.

If you really wanted to pursue this to the end, he could make a Subject Access Request to RBS (specifically the branch that he dealt with or its successor) and see if they still have any paperwork about the advice / investments at their end. But there is every chance it would be a waste of your time. If it's longer than five years ago they were under no obligation to keep records.

Does he have Lasting Powers of Attorney in place?

My main concern is, potential stupid question, would there be a situation where he could end up owing more than he was awarded?

No, it's a very good question. "No win no fee" claims can cost people a lot of money if they want to back out of the claim (e.g. because the firm is useless and they want to represent themselves) because they can be charged for the costs incurred up to that point.

This isn't normally an issue with Ombudsman claims as you could just let the complaint run to its conclusion and lose nothing, but with a dodgy cold-calling ambulance chaser you never know.

dunstonh

It's entirely possible that it was just a genuinely poor investment and that nobody was at fault. 

Whilst bank investments are typically poor to mid-range in terms of quality, and usually, at the more expensive end, they have offered virtually no investment funds that have lost money over a long-term period. And nothing with total loss (some SCARPs failed but the banks involved in selling those ended up covering the costs (that was mainly Santander).  The banks that failed during the credit crunch that sold these saw the FSCS step in and cover the loss).   Any losses that people suffer tend to be because they draw the money out during a short term negative period and it would be a partial loss.   

Investments are currently down around 10% YTD.  So, if someone invested in December, their value would be around 10% lower.  If they chased it in, they would be 10% worse off.   That is more likely to be the sort of scenario your father was in.    2000-2002 saw three negative years in a row.    The five years that followed doubled your money.  So, if your father invested before or during the negative period but pulled out before the gains kicked in, he would have suffered a loss but only a partial one.

Banks around 20 years ago were typically sales-focused, and one or two did have issues regarding risk rating investments (not RBS IIRC).  So, sometimes they put people into investments who would just be better off sitting in cash.

My initial reaction is that I don't want him to expose himself to a potentially predatory company. 

By their very nature, claims companies tend to be that.  They became FCA regulated just towards the end fo the PPI misselling period and since then, many have shut down.  Some switched to Law Society authorisation rather than FCA authorisation as the FCA is a stronger regulator than the Law Society and puts more rules in place.   Also, the FCA caps their cut of the redress whereas the Law Society does not.

Also, companies that are FCA regulated tend to use the free-of-charge regulated complaints process which also gives access to the FOS.    Law society firms will often try that and then switch to legal methods afterwards but that costs more.   At that point, some are known to introduce fees to the person complaining or worse still, get them to sign a credit agreement to pay for the cost of insurance if the case fails.      The legal company gets paid whether the case succeeds or fails that way.     These are the ones to be on guard with.

I understand that these kind of claims can be done yourself, but given the complete lack of information I have to work with, I doubt I would get very far.

The FOS have said that the success rates with claims company complaints is lower than personal complaints.    Often this is because claims companies send out a template letter with a load of generic reasons why it was missold.   i.e. shotgun style hoping something sticks.   However, this can mean that if the bank has evidence on file that counters those allegations and shows them to be false (lies or misremembering depending on your point of view) then it reduces the credibility of the person complaining and that can be important in areas where there is little or not evidence or information to suggest what happened.   The more credible side will often be the one that prevails.

Some claims companies do nothing more than say this investment was missold, please investigate.   ie. they provide no details whatsoever.     Some just email the bank an excel spreadsheet once a week with names and addresses of people that they have suckered into signing up that week and ask the bank to investigate the sale in each case.   

Inevitably, some cases will stick even that were not actually missold because of lack of evidence or sloppy record keeping.  Banks and financial firms are generally much better on audit trails today but if you go back to the days of paper records, the storage at banks has been very poor generally.  So, some cases will win a complaint even when they shouldn't.   So, a lazy CMC putting in a spreadsheet and doing no work but taking half the redress on successful cases is getting money for doing very little.

Eyeful

I  tell my elderly friends, to always hang up on "cold callers", especially if those callers what personal information or  to discuss anything to do money or investments,

If this was a cold call then he may indeed be on a "suckers list". Scammers use this technique to get money or personal information from their victim in order to "milk them dry". Your caution is well justified.

How did they get his name and phone number?
Why are they calling after all this time?     

You could assist your father to do it himself. The above relies say it all.

                   

pennanbeach

masonic said:

If your father wished to pursue a mis-selling claim against RBS, he could do so by making a complaint and if necessary referring to the Financial Ombudsman Service, for free, using the same information he'd need to provide to a claims firm. There is no need to pay anything. Based on what you have said, it is unlikely there still exists enough evidence to demonstrate he was mis-sold the product (that the risks were not explained or that it was unsuitable for his personal circumstances at the time). A claims firm is likely to drop his case pretty quickly once they realise a lot of work will need to be done by them just to establish the facts of the claim.

Thank you for your comments. I can't find out from him how he made contact with this company so will have to assume the worst that it was a cold call. Having zero evidence to hand over to the ombudsmen puts the whole thing to an end really. I'm glad to have a concrete reason to give him as to why he shouldn't progress with this though other than just my general bad feeling.

pennanbeach

dunstonh said:

Inevitably, some cases will stick even that were not actually missold because of lack of evidence or sloppy record keeping.  Banks and financial firms are generally much better on audit trails today but if you go back to the days of paper records, the storage at banks has been very poor generally.  So, some cases will win a complaint even when they shouldn't.   So, a lazy CMC putting in a spreadsheet and doing no work but taking half the redress on successful cases is getting money for doing very little.

Thank you very much for such a detailed response. It's extremely helpful for me to be able to explain to my father why we should be skeptical of this organization and just drop the whole idea. He never gave this money much thought until he started seeing adverts about claims so it obviously wasn't something he previous felt wronged over. I appreciate you taking the time to give me so much information.

pennanbeach

Malthusian said:

There is a time limit to take complaints to the Ombudsman of six years after the loss or three years after you could reasonably have been aware (although the Ombudsman has been known to ignore these).

Thank you so much for your reply, it is very useful for me. We are well past this cut off point so this is another excellent reason I can give to try and put this whole thing to and end. I haven't been encouraging my father at all to pursue this but he asked me to look into it so I felt I had to at least get some information, even though I wanted him to just forget about it.

pennanbeach

Thank you for all the replies, you've helped confirm my suspicions and I can confidently put an end to this.