The emergence of a bonds mis-selling claims service from Brunel Franklin has provoked a flurry of angry comments from IFAs.
In response to yesterday’s article and editorial comment, many IFAs have expressed outrage about the “compensation culture” and are concerned the new bonds mis-selling claims service will cause further problems for the industry.
Some financial advisers are suggesting all IFAs should try out the bondcompensation.com '30-second test' to find out whether all of their investment bond clients have been "mis-sold".
Terry Arch of Eastgate Financial Services in Loughborough believes the industry is being attacked just so claims companies can make money.
“Once again the financial services industry is being attacked so that these claims companies can make money. That is the bottom line.
“I hope this does not create another client selective memory situation and the industry is not hit with hindsight situations again.”
Kevin Gates at Gates Financial Services in Middlesex suggests an investigation into claims companies should be done to find out whether their actions are lawful.
“I'm an IFA broker who sold many bonds during my time as part of a direct sales force (Axa), tied agent (Standard Life) and now as a general practitioner IFA.
“It’s shame that a few years' downturn in the markets is causing perfectly good investment bonds to be rubbished by ambulance-chasing compensation firms. I hope that in years to come when the bonds are back on form there will be some investigative journalism done on these firms and the FSA to see whether they were right to be allowed to get away with promoting the compensation culture in this way.
“I would suggest a nominal fee of between £250-£500 would deter an awful lot of compensation chasers.”
David Tonkes of Lewis and Co in Dorset argues claims companies are not interested in justice for true mis-selling complaints but are purely chasing their cut of money from potential compensation.
“I received an endowment complaint - which was passed on to me by a product provider - from Brunel Franklin, which I duly acknowledged and started to investigate, only to receive a letter from Brunel Franklin stating they no longer wished to pursue the complaint. On further investigation it turned out that they do not pursue complaints against IFAs!
“Strange how Ian Allison mentions in your article 'unregulated cowboys' and how Brunel Franklin 'concentrated on providing excellent customer service'.
“I wonder whether that particular customer found them to have excellent customer service when they discovered the complaint wouldn't be pursued. I bet they weren't told the reason for that decision. This proves that firms like this are not interested in justice for the true mis-selling complaints but are purely chasing their cut of potential compensation and the reason they don't pursue IFAs is that we don't roll over and pay redress like the big provider firms without investigating the sale.
“It's about time these firms were exposed for what they really are. They're not interested in consumer justice due to mis-selling, they are only interested in lining their own pockets. The sooner they are regulated the better, they give our industry a bad name.”
Roy Fraser at Incapital Europe in London, has a very different perspective about the suitability of products, adding: “The simple reality of the matter is that fixed-rate bonds should be part of every investor’s balanced portfolio, along with cash, equities, property and perhaps other elements such as commodities.
“When investors are sold sham products, they are simply that: sham products. Whether they be split-capital trusts, endowment mortgages, with-profit bonds, precipice bonds or venture capital products is irrelevant; they are rarely the right product for retail investors.
“The current risk disclosure requirements in the UK are among the most stringent in the world, but you cannot regulate for greed or lack of investor understanding.
“When investors are lured into products that promise higher returns, somehow the simple axiom of 'no risk, no reward' (and thus higher returns – higher risks) seems to be forgotten. The fact that an investor is choosing bonds or any other product is irrelevant.”
Andrew Micklewright of Positive Solutions in Newcastle Upon Tyne believes IFAs are being targeted because they do not have the same power as banks to challenge the authorities.
“The nail was hit on the head when the [comment] article mentioned the banks.
“The banks set such high targets for staff they will do almost anything to get the business.
“Seeing as they normally only have one product range, their own, to choose from and they will only be told all the plus points to the investment, they will say job well done.
“When the complaints come in, the banks are big enough to challenge the authorities and get away with it. So it will come back to the small IFAs on the basis they have not got the back up of the banks.
“I had a case last week (not investment) where HSBC had sold my clients what appeared to be a perfectly good Death and CIC plan, and it was good for the first five years. But then the premiums started to increase, and did so by 50% in 12 months. Why? The salesman forgot to mention the fact they were reviewable premiums, keeping the premiums reasonably low, to get the business.
“HSBC said you had key features brochures and illustrations, did you not read them?
“What chance do we have when companies sell like this and so-called compensation companies jump on any band wagon? I can only assume protection mis-selling is not looked at because they don’t get as much potential return for the sharks that we all see advertised for compensation.”
David Kirkpatrick at David Kirkpatrick Associates criticises the '30-second test' on some of the claims companies websites, as he believes the test is likely to say the consumer has a claim no matter what answers they give.
“The 'bond mis-selling scandal' is the brain-child of the claims management companies. There is not actually a mis-selling problem however there is a problem with ambulance chasers in that the endowment scandal is coming to an end and their bills still have to be paid. How better to achieve this aim than to invent another scandal?
“Try out the 30 second test on some of the claims company websites. Answer all the questions as if you have been happy with all the advice previously given and were made aware of all the investment risks. Now will you have a small wager with me that the response will be that you probably have a claim?
“Conspiracy theorist? I think not, it's pure commercialism based on intensifying consumer's fears.”
If you have any comments you would like to add to this story or would like to speak to its author about a similar subject, telephone Emily Perryman on 020 7968 4554 or email [email protected].IFAonline
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