New research has indicated that Millions of British Households have been Mis-Sold Investments and are now sitting with unsuitable investment products.

The investment research found that 1 in 5 actually had all the different investment products explained to them, leaving 90% of people only advised on a singular invetment product. 22% of people said they were explained the full Pro’s and Con’s to the particular investment and only 19% said the investment advisor was upfront about how he made his monies

Millions Mis-Sold Investments

All of this on the backdrop of the recent fines placed on AXA by the FCA for failing to give suitable investment advice to customers.  The FCA fined AXA for its investment failings £1.8 m.

The investment failings put a significant number of customers at risk for buying unsuitable investment products. AXA has agreed to contact all customers who may be affected by its investment advice failings and a third party will oversee the review. Any customer who suffered a loss over the poor financial investment advice will be compensated and they will be able to withdraw from the investment.

 

The regulator said 26,000 customers were wrongly advised in a range of investment products while Axa staff pocketed lucrative bonuses for making the sales.

According to the FCA, customers were put into stocks and shares Isas, open-ended investment companies (Oeics) and investment bonds without Axa assessing their attitude to risk and losses.

The customers were mainly nearing retirement and largely not experienced investors. But Axa failed to confirm how much risk its customers were prepared to take or explain the dangers in clear terms.

The FCA said Axa sold around 37,000 products to 26,000 customers between 15 September 2010 and 30 April 2012 in branches of Clydesdale Bank, Yorkshire Bank and the West Bromwich Building Society. Read More on Axa

Types of Investments that have been potentially Mis-Sold :

 

  • Lump sum investments
  • Bank Funds
  • Bank Investments
  • Bonds
  • Equity Funds
  • Funds
  • Growth Bonds
  • Growth Funds
  • Income Bonds
  • Income Funds
  • Investment Bonds
  • Investment Funds
  • Investment ISAs
  • Investment Trusts
  • Managed Funds
  • Open Ended Investment Companies (OEICs)
  • Unit-Linked Bonds
  • Unit Trusts
  • With Profit Bonds

Regular contribution investments and savings plans:

  • Endowments (but not mortgage endowments)
  • Flexible Whole of Life
  • Investment ISAs
  • ISAs
  • Maximum Investment Plans (MIPs)
  • PEPs
  • Savings endowments (not mortgage endowments)
  • School fees plans

 

FCA advice on financial redress for Mis-Sold Investments

Where we uphold an investment-related complaint, we usually aim to put the consumer in the position they would now be in, if the financial business had acted correctly. In complaints about investment advice, this is likely to be the position the consumer would now be in, if they had received suitable investment advice.

how do we decide what would have been suitable advice?

In some cases, a suitable investment may originally have been discussed as an alternative to the unsuitable investment. In these circumstances, it may be appropriate to tell the financial business to pay redress based on that investment. Similarly, where money was transferred from another investment, we may decide to award redress based on remaining in the original investment.

In other cases, however, there may be no conclusive evidence as to what suitable investment would have been arranged, if the consumer had not taken out the unsuitable investment. In these cases, even if we can’t identify exactly what suitable investments the consumer would otherwise have taken out, we may be able to identify some qualities those investments would have had. In such cases, we will tell the financial business to compare what the consumer actually got with a benchmark that would broadly reflect those qualities – for example, a particular stockmarket index, an average deposit rate or a combination of these. However, the identification of an appropriate benchmark must take account of the particular circumstances involved and there may be situations which require us to take a different approach – for example, using Bank of England base rate.

what if the consumer still has the unsuitable investment?

Working out the loss involves comparing the consumer’s current position with the position they would now be in, if they had not taken out the unsuitable investment.

what if the consumer no longer has the unsuitable investment?

If the consumer no longer has the investment, we are likely to tell the financial business to calculate the investment loss up to the date the consumer ceased to have the investment – comparing the consumer’s position at that date with the position they would have been in at that date, if they had not taken out the unsuitable investment. In addition to the redress for the investment loss – up to the date the consumer ceased to have the investment – we are likely to tell the financial business to pay interest on the investment loss, from that date up to the date the financial business actually pays the redress. This is to reflect the fact that the consumer has been “deprived” of the redress for the investment loss since it accrued (when they ceased to have theinvestment).

Compensation for being deprived of money might be subject to income tax. The law requires the financial business to deduct income tax at the lower rate from this interest – but not from the investment loss – and to pay this to the Inland Revenue. Unless the circumstances indicate otherwise, we are likely to set the interest rate at 8% simple. This takes into account what the consumer is likely to get after tax, and what it would otherwise have cost to borrow the money during the period the consumer was “deprived” of it. It is not based on what a consumer could get by investing.

Read more on FCA investment Redress

 


Mis-Sold Investment: News & Information

FCA fines Axa £1.8m for failing in Investment Advice to customers

The Financial Conduct Authority ( FCA ) has fined Axa wealth, part of the AXA group, £ 1.8m for failing to give suitable investment advice to customers.

The investment failings put a significant number of customers at risk for buying unsuitable investment products. AXA has agreed to contact all customers who may be affected by its investment advice failings and a third party will oversee the review. Any customer who suffered a loss over the poor financial investment advice will be compensated and they will be able to withdraw from the investment.

Read More


FOS: Industry ‘addicted’ to mis-selling

The Financial Ombudsman Service (FOS) has raised questions about the FCA for not stepping in to the Payment Protection Insurance (PPI), and has criticised the industry for these mis-selling scandals being too common.

Read More


Investment Mis Selling – Pensioners to claim for mis-selling

Tens of thousands of pensioners could win compensation because they were not made aware that they could get a higher income by shopping around for an annuity.

Procedural failures by scheme trustees, pension providers and independent financial advisers (IFAs) who arranged annuities could all give rise to complaints if they left retirees unaware of their right to get a better deal from a different provider, according to Sackers, a specialist pensions law firm.

Read More


Mis Sold Investments Service

Each 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 us to find out about your own arrangements.’

Read More


Tim Capper reports on Financial Mis-Selling for Maple Leaf Financial. Our aim is to ensure you get honest advice and proper guidance to ensure a suitable recommendation can be made to pursue a financial claim


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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.