Another banking scandal

[CliveH]

This from one of the "pinks". If anyone thinks they are in the same situation - you may want to PM me for info on what you can do. I am particularly concerned at this because in our experience the Banks (not just Barclays) have always had just one formula for investment - We have come accross little old ladies, families with children and young high earners all going to banks for advice and ALL coming out with the same "package" regardless of attitude to risk, age or family responcibilities.

 

This is particularly bad tho'

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Banking on bad advice

 

Nicole Blackmore - 15-Apr-2009

 

Yet another tale of horror has come to light about appalling financial advice given to consumers approaching or already in retirement, with devastating effects to their financial wellbeing.

 

And the villain of the piece is another major high street bank - this time Barclays.

 

This week’s issue reveals that Barclays advisers at different branches across the country have been advising clients to cash in with-profit funds, bonds and other investments and put the lot into a single, high-risk unit trust. The advisers all chose the same unit trust in fact, which, incidentally, has high levels of trail commission.

 

Park House Financial Services partner Richard Davis says he has taken on six clients who have all found themselves in disastrous positions following Barclays’ advice.

 

He fears thousands more Barclays clients could be suffering from significant losses after receiving the same advice.

 

The fund that was recommended by Barclays was the Aviva (formerly Morley) balanced global income fund. It is featured in the Investment Management Association’s specialist sector and invests in convertibles, call options, non-investment grade bonds and equities. The fund has seen huge losses of 45 per cent in the 12 months to March 2009.

 

Davis is outraged that Barclays placed the unsophisticated investors’ entire long-term savings into one fund. He is setting up a website for disadvantaged investors with a view to a class action.

 

One client with two unit-linked investment bonds and an Isa, worth £95,000, was advised in November 2006 to cash in the bonds and transfer the Isa, reinvesting the total sum into the unit trust. Last month he surrendered the investment for just £45,000.

 

Another client with three with-profit bonds with a surrender value of £360,000 was also told to cash them in and reinvest the money in the same unit trust in July 2007. Last month his investment was worth £172,000.

 

Syndaxi Chartered Financial Planners managing director Rob Reid says: “If this is an institutional approach it is further evidence that the quality of advice emanating from the banks still has a long way to go before it is acceptable.”

 

But Barclays insists that all its recommendations are tailored to each individual customer and disputes accusations that its advisers are systemically recommending the Aviva fund.

 

Some complaints are with, or are on their way, to the Financial Ombudsman Service. It is hard to imagine they won’t be upheld.

 

As consumers continue to suffer at the hands of the banks, in some cases watching their lifelong savings disappear, what has to be done to stop this kind of bad practice?

 

It is well-known the banks are responsible for the vast majority of complaints to the Ombudsman, while IFAs account for just 4 per cent. The FSA has already rejected industry calls for a clear split between sales and advice under the RDR, but perhaps the behaviour of the banks in recent times could see the regulator change its mind.

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Amen to that last paragraph!

[net-traveller]

I'm not in this position because I always take the view that if "they" say it's very good for me then it has to be so much better for them so I do my own research. I appreciate that I may lose out on a good deal but 'it's all my own work' so I can sleep nights.

 

I have noticed over the last few months that most of the banks and building societies are pushing long term investments some of which do not receive the interest until the bitter end and if you withdraw early for any reason, including death, you are penalised. They don't seem to take account of the investors circumstances either.

 

Don't know what can be done about it except to return to the days when banks were banks and investment companies were just that. The deregulation which, allegedly, should have given consumers a better deal seems to have produced the opposite effect.

 

;-)

[colin]

As you infer Clive, banks will just 'advise' to invest in whatever product is giving them best bonus that month, we have had experience of this with Lloyds and Barclays, thankfully ignored in both cases.

By the way, I read that some banks are now reaping the rewards of getting tax payers money to stay in business and preparing to stick two fingers up at the world and pay even bigger bonus'.

[W3526602]

Hi,

 

Lets pretend that the banks are back on power thanks to HMG helping them with my money. Then I decide to SKI.....mortgage the house, buy a camper van....at age 70. I can afford it, but will the banks let me?

 

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