Mis-sold Investments – The Major Banks such as Lloyds, TSB Halifax, Barclays, HSBC Santander, RBS and Building Societies targeted customers who had large balances. This money could have been due to an inheritance, Pension lump sum, house sale or compensation for an accident.
Branch staff were targeted to get appointments for their Financial Advisers so they would contact customer to get this arranged.
Financial Advisers were targeted for investment sales linked to the stock market. The Banks and Building Societies received commission for the investment sales. Therefore, many investments were sold with the commission in mind rather than the customer’s needs.
How were investments mis-sold?
Investments mis-sold included Investment Bond, With Profit Bonds, Unit Trust, OEIC’s, PIP’s, Stocks and Shares ISA’s and Portfolio Management. Lloyds and the Halifax investments were usually with Scottish Widows.
In many instances the customer was new to investment and they did not fully understand the risks associated with the stock market. In fact, in some instances the risks and charges were never explained. Most customers trusted their Bank’s and Building Society and excepted the advice they were given being the best for them.
Investments were mis-sold if they exceeded the customers customer attitude to risk. In many cases the investment was mis-sold because most of the customers capital was invested. As a result of the excessive amount invested, they were likely to panic if the investment went down in value. Therefore, they we likely to surrendered the investment at a loss for fear of losing all their money.
Most customer excepted any losses they incurred as them being unlucky and did not complain. However, in many cases it was because they had been mis-sold and mis-advised at the outset based on the following:
- The investment recommended was inappropriate when considering the customer’s personal circumstances at the time.
- The investment did not reflect their risk profile.
- The risks associated with the investments were not explained.
- The amount recommended for investment was excessive and put most of their available capital at risk.
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