Ombudsman probes mis-selling by Lloyds' investment arm

Mislabeling is easy to regulate but investments can naturally always go sour.

I agree with the Citywire verdict, but once again the taxpayer gets hammered. We are in danger of a tsunami of compensation that will wipe out any savings or cuts that the government tries to make.

The selling of investment products is regulated. The public are lulled into a false sense of security. There is too much emphasis by high street banks and the like on flogging products and not enough on giving proper advice and seliing appropriate solutions. There is a case for intervention by the FSA.

Does that mean the shares I bought in Lloyds as a prop to my dismal pension are going to take yet another hammering? Savings? Investments? Shares?....I give up, its bloody hopeless - I've been ripped off at every turning and my savings are all but gone......well done you gangsters in the city, you've taken my leg up good and proper - bastards!

Ordinary men and women had no conception of the changes that occurred in the ethos of the building societies in the eighties.

The Halifax Building Society, an historical byword for prudence and reliability, began in the period 1980 - 1990 to aggressively sell with profit endowments for the sake of the commission that could be earned. They entered into covert networking agreements with insurance agents to share in the commissions on the policies, sold ostensibly by that agent. This would not have been discoverable by the average mortgage client whose suspicions would not, in any case, have be alerted when dealing with the No. 1 BS in the UK. A mutual society which was, in effect, a band of brothers.

Then, when the tie up with Standard Life was mooted in 1988, the Halifax began to sell S L policies for all it was worth. In our case they churned ("recommending a new policy to replace an existing, usable policy, solely for the sake of the commission") the endowments sold some 9 years earlier. They wanted the fresh introductory commission on the new policy.

The loss in our case was estimated by an expert at some 25K, whose report was accepted in evidence by the court. The Financial Ombudsman Service estimate of our loss was approximately £925. We obtained a decision from the ombudsman that a churn had occurred, rejected the FOS offer, and sued in the county court and won. We had the distinct satisfaction of sending in the bailiffs to the Halifax Head Office. They applied to have the judgment set aside, and lost the appeal.

However it took six years of our lives because the defendant bank/building society will delay at every opportunity, and the FOS procedures permit them to do it - after all, FOS is funded by the very same defendants, so they are not going to be too draconian with their paymasters. Also time, for the purposes of the Limitation Act 1980 is running during the FOS period, so you can end up statute barred in the county court.

The point I wish to end on is that the FOS argue strongly that the customer is better off without the services of a professional claims handler. This, in my opinion, is often very bad advice. In our case we finally went to such a company to obtain an experts report for the forthcoming county court proceedings. We chose Endowment Solutions, a company specializing in mis-selling claims. The head of the company, David Lloyd, was, and is, an actuary. He was absolutely excellent - if we had gone to him at the outset an entirely different type of conversation would have ensued with both the Halifax and the FOS. We would have won a lot earlier.

Best Wishes to all the "Davids"

Does all othis mean that if the gentleman concerned had made an exceptionally large profit in the property investment he would have returned that to the bank?

Bob,

He wasn't asking for an "exceptionally large profit" merely a safe home for his money with a bit of interest. He doesn't have to act as a charity if the banks gamble pays off - he never asked them to take that gamble. Indeed he told them not to do so, if the evidence as to low risk is to be believed. Ever heard of a trustee's duty to diversify? An analagous duty surely rests on a professional person acting as a fiduciary? These people set themselves up as experts and then disregard the most basic investment principles.

timothy,

I'm not sure that behaving in a consistent and honest way constitutes acting as a charity but I suppose we're fortunate that while there is a concept of misselling there is no duty on the "misbuyer" to return any unlooked- for profit.

Bob,

How did he become a mis-buyer? That implies a degree of fault, or, at the very least that he knew, and accepted, the risks and then complained. He was just an elderly man with an inheritance, who went to his local branch for advice. It's not as if he opened up some kind of spread betting account and then whinged because he lost. They should have diversified and, had they done so, they would have escaped any censure.

It is not clear from the article how an approach to HBOS resulted in a visit from the Lloyds controlled Bank of Scotland Investment Service. Am I to believe that HBOS picked up a referral commision by tipping-off Bosis or what? Somebody please explain. Thank you

Every investment I have made through Lloyds has been a falure, perhaps this is their way of making money . even their shares reduced .

As for their involvement with insurance Scottish Widdows , not a good place to take advice , they should stick to JUST banking and put that right, if they can .