Most people recognise the need for long-term investments, whether it is for retirement, a rainy day, to provide their kids with a nice inheritance, or any other reason. As such, the main goal of long-term investing is to have capital growth and income at the same time. This should be simple to achieve. After all, there are numerous professional financial advisors that are supposed to help people make the best investment selections for their needs and interests.

Unfortunately, the media attention given to certain companies who have blatantly mis-sold investments has led many people to reconsider investing. In fact, some financial advisors have been found investing millions of pounds into risky markets without properly informing their clients of the risks involved with this type of speculation.

Mis Sold investment case study

In one case, a married couple, who were investing for their first time, invested 113,000 pounds with a financial advisory firm. The couple was looking for a low risk long-term investment, but the company advised them on what they would invest the money in and made the same recommendation to the couple, which was that they invest in the property sector. The financial advisor never explained to the couple the nature of their investment and the inherent risks involved with this form of investment. Nevertheless, the company suggested that they invest 68,000 pounds into a commercial property investment portfolio and the rest was to be diversified amongst the commercial property sector.

Adding to the matter, the couple sold their holiday home, and based upon further negligent advice from the financial advisory firm, they invested an additional 45,000 pounds into the recommended commercial property investment portfolio.

The company handling the portfolio then declared a suspension of shares offerings, because it turns out that they invested in other property funds instead of holding on to the funds directly. Therefore, the company relied upon the distribution of funds from other funds before they could issue distributions to their own clients. This important tidbit of information was never mentioned to the couple by their financial advisor, even though the firm knew that the couple had given up the equity in their home and invested a large portion of the money they received from the sale of their estate into the portfolio investment. It was obvious that they could not afford to lose this money. Unfortunately, the fund froze and the couple could not withdraw any of their money. Despite being told that their investment was safer in the fund than the private property market, the couple lost the entire sum of their investments.

The financial advisory firm provided further grievance by rejecting the mis-sold investment claim and only proposed compensation by way of a reverse auction. The reverse auction would have involved the couple bidding on the price they would be willing to sell their shares to the financial advisory firm, but the firm would only accept the lowest selling price.

Based upon the lack of skilled advice, poor level of care, and the misrepresentations of the firm, which are requirements of the Sales of Goods and Services Act of 1982, the couple’s claim was made successful by the Financial Ombudsman Service. Despite withdrawing 12,000 pounds and the price of their shares falling to 33,000 pounds, the couple was awarded 100,000 pounds as compensation for being grievously mis-sold an investment.

Needless to say, they were more than happy with the outcome of their claim. It was a lengthy and challenging process, but justice was served. No one’s life savings should been taken away by a financial advisor for the sole sake of earning a commission.



Maple Leaf Financial 

Each mis sold investment case is different and they are all assessed individually. Sometimes we can claim because investments were simply unsuitable and they were mis-sold. In other cases it may be because of technical shortcomings in contracts, regulatory issues or a combination of these factors.

‘Most of our clients had no idea there was a problem with their policies or investments before they spoke with us. You have nothing to lose by calling Maple leaf financial investment mis-selling to find out about your own arrangements.

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Tim Capper

Bringing you financial news and information in plain english for Maple Leaf Financial. My aim is to help readers understand these often complex financial instruments.