FINANCIAL OMBUDSMAN SERVICE COMPLAINT

During the 1980’s and 1990’s a new phenomena hit the UK financial services market relating to the sale of unsuitable investments by over zealous or in many cases dishonest salesmen. This scandal which affected millions of people causing very substantial lost capital and income became known as financial products mis-selling and mainly related to endowment or pension mortgages, high income bonds and private pension schemes. These shortfalls have resulted in compensation being paid following a Financial Ombudsman Service complaint and where the provider cannot make redemption an application to the Financial Services Compensation Scheme may result in payment.

The Financial Services Authority (FSA) regulates the financial industry in the UK. Disputes regarding financial services are now resolved either in the law courts or through the Financial Ombudsman Service complaint scheme. In addition The Financial Services Compensation Scheme (FSCS) administers a fund of last resort.

In all cases the modus operandi of the salesman was very similar in that an allegedly much improved product was offered with higher income or increased final capital and customers were persuaded to move their investment from one product to another. What the salesman often omitted to tell the customer was that they received very substantial commission on the deal and that the capital sum was to be invested in the stock market and was no longer guaranteed.

Whilst the stock market continued its upward trend throughout the 1980’s and 1990’s by the end of that decade there was stagnation of share prices or in many cases there was an actual reversal meaning that capital funds were often much reduced when compared to the original investment. This resulted in capital losses to the majority of investors and a reduced pension for those who contracted out of the rock solid government SERPS scheme.

The reasons why a financial product may be deemed to have been mis-sold are many and varied however some of the most common grounds supporting a Financial Ombudsman Service complaint by an investor are outlined below :-

• The salesman did not carry out a fact find with the investor to determine the most suitable forms of investment based on the investors personal circumstances.
• There was no discussion about how the money was to be invested and the investors attitude to risk and the fact that the capital sum may decrease was not part of the sales pitch.
• Alternative investments more suitable to the investors needs were not proposed or discussed.
• The risks associated with early termination were not clearly outlined and the investor was not told that domestic financial products are usually long term investments.
• Misleading information was given about the stability of the fund and assurances were made that effectively guaranteed the value of the fund.

If you would like free advice on financial product mis-selling either complete and send the contact form or call the helpline and an expert adviser will discuss your potential compensation claim at no cost to you. If after discussing your claim with us you wish to take the matter no further then you are under no obligation to do so and you will not be charged for our initial advice.