Newly retired policeman Stewart Urwin and his wife Melody were looking forward to enjoying their retirement. All they wanted from their investments were “a few little holidays and nice little car to run about in.” Sadly, after investing the proceeds from the sale of Melody’s tea shop, which represented their life savings, they were left with far less. Following the guidance of the supposed professionals at Halifax, the Urwins placed their money in an equity-linked investment bond. When Mr. Urwin went back to check the status of his investments a year ago, he was dismayed to learn they had lost almost 30 percent.

A story of mis-sold investments

Unfortunately, the story of the Urwins is all too familiar these days. Millions of people have suffered from being mis-sold investment products in recent years, and millions more are likely to suffer similar fates for years to come. Ten years after the establishment of the Financial Services Authority, the problem of unscrupulous salespeople scalping innocent victims seems to only be growing.

Realising that the current system is simply not working, regulators and politicians have proposed serious reforms. However, the gamut of proposed reforms by the Conservative and Labour parties seems likely to present the possibility of more problems than solutions. The politicos want you to believe change is in the air, but industry specialists are not expecting a new dawn anytime soon.

Mis-selling has clearly become an epidemic. A terribly poor quality of financial advice seems to be sweeping the land. Currently, the Financial Ombudsman Service is receiving nearly 800,000 complaints a year from dissatisfied purchasers of financial products, many of which believe they have been outright lied to. Sadly, these people who have issued formal queries are only a fraction of those affected by the mis-selling of financial products. Many more may still be going through the complaint process with the companies themselves and others may not know they have been mis-sold yet.

It has become evident that mis-selling seems to happen in phases, as specific products are pushed upon the public by product providers and sellers. For example, almost five million people may have been affected by being mis-sold endowment mortgages. Many others were fleeced by additional voluntary contributions and home income plans. Still more were mis-sold loans that they obviously could not afford during the recent credit boom. The current financial product being pushed on unsuspecting victims is payment protection insurance, but the next profit opportunities for these sharks are already coming into view.

The traditional victims of these schemes have always been poor people with a tendency to blindingly trust authority figures. However, the increasing sophistication of these schemes is causing wealthy individuals to become prey as well. The recent sale of funds to hedge funds is a prime example of this.

The basic human weaknesses of greed and the apparent need to keep up appearances are often preyed upon by sales people in search of commissions. In fact, many believe that the heart of the problem lies in the avaricious desire of salespeople to earn commissions, regardless of those that may be negatively affected by their unscrupulous greed.

While salespeople acting as intermediaries receive commissions, building society and bank staff members receive extra pay for their increased sales effort as well. These institutions are increasingly pushing the necessity of hitting sales targets on their staff, which some consider the root of the problem. This problem has become so pervasive that many experts recommend avoiding banks and building societies altogether.

The same sage advice is usually always given to those who do not want to be mis-sold a financial product: do not be afraid to ask the necessary questions, and never purchase a product or invest in something that you do not understand the details of. A small fee for professional and unbiased financial advice is usually always warranted. Also, in order to not be swayed by supposed advisors in search of their next commission, it is critical to acquire a basic understanding of the financial markets and products. The best way to avoid being mis-sold an investment is self-reliance and not putting your financial future blindly in the hands of an advisor. Of course, they may still prove useful, but never purchase a product from them that you do not understand yourself.


Maple Leaf Financial mis-sold investment 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 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.