As people head into the golden years of retirement, some discover that their carefully planned stash of retirement money turned out to be a mirage.

Mis-Sold Retirement Case Study

Such was the case for a couple about to retire. They asked an independent financial advisor how best to invest an inheritance of £62,000. The advisor suggested stashing £55,000 into investment bonds. The rest of the cash, including £21,500 in other Isas, would be funneled into shares Isa and stocks.

The upfront costs would be high, and the advisor told the couple not to touch the retirement stash for five years. After paying the fees, they were assured that the investment would allow them to take out about £4,000 annually.

Now, seven years later, they have no income and their original retirement pot has dwindled to less than they had when they first entered this retirement scheme.

Does this unfortunate couple have grounds for a mis-selling claim?

This story, related in the This is Money section of the Daily Mail, is becoming more common as people reach retirement age, and they discover that the advice from an IFA may not have been very good advice.

In this couple’s case, the fact that they were charged high upfront fees and needed to wait for five years before drawing out cash benefits from the investment should have set off warning bells. At this stage, the best they can do is write a complaint to the IFA. The couple can try to make a case that the investment advice was not proper for them, but they can’t kick up a fuss about the performance of the investment.

The letter of complaint from the couple should state that they were seeking investment advice on a retirement scheme that would not risk the principle and would return a set amount of cash annually.

The letter should also outline the investment list, while expressing chagrin that this investment model required high upfront costs and no pay out until five years in the future. Then ask the IFA why he thought this scheme was appropriate.

Next, the couple should state that they believe they were mis-sold this investment vehicle, and they want their money returned.

Finally, the couple should ask for compensation from the financial firm that is similar to other settlements ordered by the Financial Ombudsman.

This letter sails the issue into the financial firm’s court, and they have eight weeks to reply. If the reply is unsatisfactory, the couple may take this matter up with the ombudsman.

The mis-selling of investments is a wide subject, and nearly any investment can be mis-sold. It appears that another banking scandal may be brewing as pensioners and people nearing retirement look for ways to protect their nest eggs.

Many customers of building societies, banks and financial firms are losing money on risky investments that were not properly vetted.

Here are a number of warning signs that indicate the possibility of a mis-selling scheme:

* You lost years of interest from a guaranteed investment bond even though you received the principle back.

* The pension you hold now is worth less than what you paid into the plan.

* You are invested in a property fund scheme.

* All or most of your pension was placed into a single investment scheme.

* You were sold an annuity that returned next to nothing.

* Your circumstances or financial sophistication were not taken into consideration.

* You were not properly advised about the risks of a financial scheme.

Financial advisors are under a legal obligation to inform you about the risks of an investment. Any failure to meet this obligation could be a mis-selling circumstance. Pensioners and those close to retiring should seek advice from consumer organizations or an ombudsman if they feel they have been mis-sold financial advice.



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.