Banks have been making the news again about the mis-selling of protection and investment products including investment bonds. As investment bonds are linked to the stock market they are inherently risky and not suitable for everyone (in fact they are not strictly bonds at all, as you are not a creditor to the bank). Yet some people have been persuaded into paying into investment bonds (or investing more than they intended) and now regret the decision.
Why Does Mis-Selling Happen?
Mis-selling can happen for a number of reasons. Bad sales practices (e.g. ‘hard sell’ approaches) can be passed down to staff; sales staff could be poorly trained in the products they are selling or, in rare cases, deliberate mis-selling can happen. In the case of the high street banks, which made the news at the end of 2013, it was revealed that employees had been incentivised with over £1,000 per product for selling investment bonds and threatened with demotion if they failed to meet sales targets. This put pressure on them to mis-sell investment bonds.
What to Do if You Have Been Mis-Sold
The first thing you need to do is honestly ask yourself whether you have been mis-sold investment bonds. This has nothing to do with the benefits you may or may not have received from your investment.
For example, if you understood the risks involved and lost money because of the performance of your funds, you were probably not mis-sold to. If, on the other hand, you were incorrectly advised you had to pay a large amount into your investment bond, then you were mis-sold to – even if your investment ended up making you a lot of money.
If you believe you were mis-sold investment bonds, the next step is to gather together any information that might support your claim and contact your provider for details of their complaints procedure (this information may be on their website). Contrary to some people’s belief, you do not need concrete proof of mis-selling to make a successful claim.
Next, follow the steps outlined in your provider’s complaints procedure, dealing only with the facts (resist the temptation to include information about your emotions or issues that aren’t specifically connected to the original mis-selling).
Your provider then has a duty to provide you with a final decision on your claim within eight weeks (although you might want to give them longer if progress is being made).
If a final decision has not been made – or your provider has ignored your correspondence – you can contact the Financial Ombudsman after eight weeks. Don’t go directly to the Ombudsman before this time as you have to prove you have gone through your provider’s complaints process before the Ombudsman will deal with your case. The Ombudsman service is independent and totally free to use, but you must contact them within six months of the mis-selling.
If you are not satisfied with the Ombudsman’s decision, your last resort is to take your case to court. This is expensive and you will have to shoulder the costs if you fail to win the case.
More often than not, an arrangement can be made before this point which is fair and acceptable to both provider and customer.
If you need any guidance you can consult with the experts at C.L. King & Associates. As an active fixed income underwriter, C.L. King co-manages the issuance of investment grade bonds, high yield bonds and $25 par value retail bonds and preferreds. Our peer-leading capital base, proven fixed income sales and trading platform, and long-standing distribution capabilities into retail broker-dealers and mid-tier bond investors allows us to handle large underwriting commitments.