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  • FIRST POST
    • MSE Guy
    • By MSE Guy 18th Jan 11, 12:32 PM
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    MSE Guy
    MSE News: Barclays to pay £60m compensation for investment mis-selling
    • #1
    • 18th Jan 11, 12:32 PM
    MSE News: Barclays to pay £60m compensation for investment mis-selling 18th Jan 11 at 12:32 PM
    This is the discussion thread for the following MSE News Story:

    "Thousands of customers are set redress after the bank mis-sold risky investments to those wanting a safe haven for their cash. ..."

Page 1
    • dunstonh
    • By dunstonh 18th Jan 11, 1:23 PM
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    dunstonh
    • #2
    • 18th Jan 11, 1:23 PM
    • #2
    • 18th Jan 11, 1:23 PM
    I wasnt surprised by the redress they have had to pay as that was inevitable for such a basic error. The level of the fine was the main news for me as it was far higher than the normal 1-2 million that you normally see. Suggesting the issues at Barclays were wider than just an incorrect risk profile being applied to the fund.

    Between those dates, Barclays sold to 12,331 people with investments totalling £692 million.
    Just goes to confirm that the banks really dont have to offer quality products, quality investments or good value investments or even good advice. It just walks through the door. That is an average investment of £56,118 per person. Each and everyone choosing a low skilled sales force who could only sell from an expensive limited panel of providers when just down the road they could have obtained independent advice cheaper and including the whole of market.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • sabretoothtigger
    • By sabretoothtigger 18th Jan 11, 1:29 PM
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    sabretoothtigger
    • #3
    • 18th Jan 11, 1:29 PM
    • #3
    • 18th Jan 11, 1:29 PM
    Barclays also has alot of trust plus the most awesome icon. I know someone whose worked for Barlcays since the 80's and the customers have alot of loyalty to the brand and see Barclays as a cut above the rest.
    Not sure alot of people get the idea they could go anywhere and get the same products or investments at a better price
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    • Loughton Monkey
    • By Loughton Monkey 18th Jan 11, 3:33 PM
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    Loughton Monkey
    • #4
    • 18th Jan 11, 3:33 PM
    • #4
    • 18th Jan 11, 3:33 PM
    I wasnt surprised by the redress they have had to pay as that was inevitable for such a basic error. The level of the fine was the main news for me as it was far higher than the normal 1-2 million that you normally see. Suggesting the issues at Barclays were wider than just an incorrect risk profile being applied to the fund.
    Originally posted by dunstonh
    Same here.

    I have a distinct (and unhappy) recollection of being a director of a Bank Insurance company. Abiding perceptions include:

    1. Liaison meetings intended for Fund Managers to communicate with Life Product Managers about fund performance. Graphs showing abysmal performance compared to indices and competitors would never be discussed. Commission rates on new 'Structured Products' would be the only topic of 'interest'.

    2. The ever increasing demands of 'compliance'. In the 'good old days' a life company had underwriters. Depending upon activity, you would need X underwriters to assess all the cases. However, the 'Fact Find Police' need to be there also to 'check' that the salesman has given 'appropriate' advice (an inexact science after the event). It is no joke when the number of these people starts exceeding X, and eventually needs to by a multiple of X.

    3. An inbuilt culture that imposes a more 'softly softly' approach to the 'best' sales people. With a few easily spotted exceptions, the vast majority of such sales people are 'good' only because they 'sail close to the wind' with the customer. That's bad enough, but when this is rewarded by 'toning down' examination, it is no surprise what you get!
    • peterbaker
    • By peterbaker 18th Jan 11, 6:50 PM
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    peterbaker
    • #5
    • 18th Jan 11, 6:50 PM
    • #5
    • 18th Jan 11, 6:50 PM
    Is this the first of the prosecuted financial services mis-selling scandals that comes with a "don't call us we've insisted that they'll call you" remedy?
    Last edited by peterbaker; 18-01-2011 at 6:53 PM.
    • dunstonh
    • By dunstonh 18th Jan 11, 7:04 PM
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    dunstonh
    • #6
    • 18th Jan 11, 7:04 PM
    • #6
    • 18th Jan 11, 7:04 PM
    Is this the first of the prosecuted financial services mis-selling scandals that comes with a "don't call us we've insisted that they'll call you" remedy?
    Originally posted by peterbaker
    No. Its normal practise for investment related issues where trends have been identified. It doesnt seem to get applied to other areas but it is quite common on investment backed products.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • Loughton Monkey
    • By Loughton Monkey 18th Jan 11, 8:17 PM
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    Loughton Monkey
    • #7
    • 18th Jan 11, 8:17 PM
    • #7
    • 18th Jan 11, 8:17 PM
    Is this the first of the prosecuted financial services mis-selling scandals that comes with a "don't call us we've insisted that they'll call you" remedy?
    Originally posted by peterbaker
    Far from it. It applied in trumps to the Mortgage Endowment shortfall issue, and then the Pension Transfer issue. The second one (in my opinion) having a bit more 'meat on the bone' than the first one.

    It is quite normal for a single (or a few) mis-selling issues to result in a mass mailing of all those who could have been effective. In some cases, more costly than the fine itself.
    • Rollinghome
    • By Rollinghome 18th Jan 11, 8:26 PM
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    Rollinghome
    • #8
    • 18th Jan 11, 8:26 PM
    • #8
    • 18th Jan 11, 8:26 PM
    Each and everyone choosing a low skilled sales force who could only sell from an expensive limited panel of providers when just down the road they could have obtained independent advice cheaper and including the whole of market.
    Originally posted by dunstonh
    Not an IFA by any chance, ah yes, so you are.

    A very high proportion of IFAs are former banks and insurance salesmen of course and while they were flogging their employers wares, they were the bee's knees apparently. After they leave it appears most suddenly develop a conscience and it becomes apparent to them was all one shocking rip-off. The miracle of a Damascene conversion.

    The poor behaviour of banks and the shifty salesmen they too often employ is very hard to deny but there rarely seems any gratitude expressed by IFAs for the lot who taught them their trade. Gives hope to all leopards who fancy a change of spots.
    Last edited by Rollinghome; 18-01-2011 at 8:29 PM.
    • dunstonh
    • By dunstonh 18th Jan 11, 8:48 PM
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    dunstonh
    • #9
    • 18th Jan 11, 8:48 PM
    • #9
    • 18th Jan 11, 8:48 PM
    Not an IFA by any chance, ah yes, so you are.

    A very high proportion of IFAs are former banks and insurance salesmen of course and while they were flogging their employers wares, they were the bee's knees apparently. After they leave it appears most suddenly develop a conscience and it becomes apparent to them was all one shocking rip-off. The miracle of a Damascene conversion.

    The poor behaviour of banks and the shifty salesmen they too often employ is very hard to deny but there rarely seems any gratitude expressed by IFAs for the lot who taught them their trade. Gives hope to all leopards who fancy a change of spots.
    Originally posted by Rollinghome
    God help anyone who was a trainee in their career. Not everyone can be like you and know it all from the day they are born.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • peterbaker
    • By peterbaker 18th Jan 11, 8:49 PM
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    peterbaker
    Very good, Rollinghome ... very, very good ... spot on I shouldn't wonder ...
    • davidgmmafan
    • By davidgmmafan 19th Jan 11, 8:52 PM
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    davidgmmafan
    "I know someone whose worked for Barlcays since the 80's and the customers have alot of loyalty to the brand and see Barclays as a cut above the rest."

    Those people need to see the Whistleblower program. It not only shows a callous attitude to people who have incurred charges, one guy brags amount how many sob stories he had turned down. It also shows, with undercover filming the (how can I put this) motivational techniques for staff. Basically if you don't reach the required standard (which is about stats not quality of service incidentally) you will be abused and managed out.

    Sadly this is common to many banks and building societies and we're going to see more of this thing IMO. Generally regulators in this country are very wary, so the size of the fine shows they had no option and its proabably a miracle they didn't have more cases.

    Final point its also revealing what the banks attitude was. They emplyed the usual deny everything approach to complaints, even as the issue was getting publicity and more people were realising they'd been done over. Once again we see the filtering approach to complaints they all employ at work.
    Mixed Martial Arts is the greatest sport known to mankind and anyone who says it is 'a bar room brawl' has never trained in it and has no idea what they are talking about.
    • chudies
    • By chudies 20th Jan 11, 9:47 AM
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    chudies
    I wasnt surprised by the redress they have had to pay as that was inevitable for such a basic error. The level of the fine was the main news for me as it was far higher than the normal 1-2 million that you normally see. Suggesting the issues at Barclays were wider than just an incorrect risk profile being applied to the fund..
    Originally posted by dunstonh
    This was in fact the highest fine levied against a firm by the FSA for retail failings.

    One of the key issues why the fine was so high was that Barclays knew about the identified potentially unsuitable sales BUT then failed to act appropriately - hence the fine is so high to remind others/deter others from not falling in to the same trap .
    Lets hug!!
  • rickbonar
    I know someone that nearly signed up to one of these schemes but with a different bank.

    A stark warning to anyone NEVER to sign up to any of these "investments"

    Mind you I think if it was a member of my family I would like to take personal remunerative action ..... ie. kidnap the head of the bank or fund manager and offer him the choice of my families money back or his hands and feet.
    • dunstonh
    • By dunstonh 20th Jan 11, 1:10 PM
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    dunstonh
    I know someone that nearly signed up to one of these schemes but with a different bank.
    There was nothing generically wrong with the "scheme". It was Barclays getting the risk profile wrong. If the risk profile had been right then there would be no case.

    I can imagine Aviva are fuming as its their fund that gets mentioned and people often make the mistake of blaming the provider when they have done no wrong when its the salesforce (or its management in this case that spoon feeds the low skilled sales reps).
    A stark warning to anyone NEVER to sign up to any of these "investments"
    What do you do with your money instead if you dont use investments? Sure, don't use the banks but not using investments seems a bit extreme.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • chudies
    • By chudies 20th Jan 11, 1:19 PM
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    chudies
    Was the fine really that high?

    Barclays invested £692m probably @7.5% commission - so the fine represents 15% of what they earned on the sales.
    I think most IFAs would be delighted if they has acted with such gross neglience/incompetence and only got fined 15% of the commission earned.
    Originally posted by feesarefare
    i didnt say i agree with the fine -

    as far as my opinion counts, i think the fsa/other bodies should be have fines 10x current levels - this is the only way organisations may listen!
    Lets hug!!
    • dunstonh
    • By dunstonh 26th Jan 11, 10:36 AM
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    dunstonh
    Barclays have just announced that they are closing their salesforce.

    http://www.citywire.co.uk/new-model-adviser/barclays-financial-planning-arm-to-close/a466159?ref=new-model-adviser-latest-news-list

    Whilst this fine and redress won't have helped, it does indicate that the big players don't see a future in providing full advice post RDR (retail distribution review). Personally, I didnt think they would pull out altogether but go down the restricted advice route. Pulling out of providing advice altogether was a surprise. Although logical given the remuneration is likely to be lower in future, training and compliance far more expensive and time consuming and consumer protection is ever increasing (to a point where it is almost not affordable to offer advice any more).
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • dunstonh
    • By dunstonh 26th Jan 11, 4:54 PM
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    dunstonh
    Couldnt they have just changed their "cost of services" to say their fee was 7% of the amount invested instead of their commission being 7% of the amount invested, and just carried on as before. Or perhaps someone has pointed out the the top brass at Barclays that once their salesman/women will actually have to disclose the upfront cost to the client that the sale might be a tad harder.
    Did banks still have that anomly where they only had to show a "cost of advice" figure based on estimated remuneration for that particular staff member? I know they used to but not sure if that was the case any more. They used to get away with the bank keeping the 7% (or whatever) but showing the cost of advice at around 2% as that is what the member of staff may have been costed at.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • jo2757
    Hi,
    This is my first post. Don't know anything about finance so hoping somebody can help me.
    Trying to help my parents out with a complaint to barclays, they invested some money with barclays in 2006 and lost a whole load of money. After reading recent press I assumed it would be the aviva investments that they had put their money in to. But on reading their paper work it turns out that the investment was a legal and general cautious portfolio.
    Can anybody tell me if this is the same/similar scheme as the aviva investments?
    Thanks
    • dunstonh
    • By dunstonh 28th Jan 11, 3:36 PM
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    dunstonh
    Can anybody tell me if this is the same/similar scheme as the aviva investments?
    No. There was nothing wrong with the aviva investments. Barclays just incorrectly risk graded it as cautious when it was not. Your parents had a cautious portfolio which is designed for cautious investors. That risk rating was fine.

    Trying to help my parents out with a complaint to barclays, they invested some money with barclays in 2006 and lost a whole load of money.
    2006 wasnt a great time to invest with hindsight but after the losses of late 2007 to early 2009, the period after that has seen them recover and return to profit in most cases (often a lot more into profit with cautious portfolios). In the L&G cautious fund (barclays versions) the fund lost less than 25% (so not much) from highest point to lowest point and irrespective of the point invested in 2006, it would now be in profit. So, how have your parents lost a whole load of money?
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • jo2757
    Thank you.
    Yes they did stress at the time of investing that they wanted something safe as it was there retirement money. When they realised they were loosing money they met with the sales advisor to complain that they had been ill advised. The sales advisor said 'sorry, we weren't expecting this to happen.' My father the asked for the worst case scenario on his investment and was told they could be looking at £24,000 from initial investment of £42,000. My parents are were obviously very afraid by this and withdrew the funds. I believe they were miss-sold this investment and as a direct result of Barclays incompetence and have suffered a financial loss.
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