Other Citywire websites
Stay connected:

View the article online at http://citywire.co.uk/new-model-adviser/article/a647433

Lottery winners renew FOS fight with Coutts

by Daniel Grote on Dec 24, 2012 at 10:39

Lottery winners renew FOS fight with Coutts

A lottery-winning couple have renewed their battle for compensation from Coutts over its advice to invest in with-profits bonds, according to The Sunday Telegraph.

The couple won £1 million on the lottery in December 2001 and were advised to invest £650,000 into with-profits bonds, which gave them just £10,000 a year to live on, according to the paper.

They took their case to the Financial Ombudsman Service (FOS), which ruled against them. But the FOS has now agreed to review the case after receiving further evidence.

‘We chose Coutts because they are the Queen’s bank and we thought that they would be a safe pair of hands,’ said the couple, who did not wish to be named. ‘We are so disappointed.’

A spokesman for Coutts told the Telegraph: ‘We cannot comment on individual cases because of client confidentiality’.

5 comments so far. Why not have your say?

Bob Donaldson

Dec 24, 2012 at 11:13

And What was the commission earned on this bond by this so called respected bank. The advice beggars belief!

report this

KENNETH WEBB

Dec 24, 2012 at 11:32

My cat could have invested these monies better. They should have put maximum amount into UK Premium Bonds & Irish Prize Bonds(same type of thing) & done their own homework & then spread the rest around........The lesson being (obviously) never put all your monies in one type of investment...........STILL at least they still have their capital sum.

As for their 'adviser(s)' USELESS.

report this

Paul Howard

Dec 24, 2012 at 12:37

Question is - why can a complainant keep adding to their complaint (until they get a yes basically)?

If FOS ruled against them - surely, thats the end of that route? (If it hadn't reached the omudsman level - surely the report is then wrong and reporting on it surely is detrimental to the process????)

With regard to the advice - as with anything - without knowing all the facts, I can't see how some one can say it was 'useless' and 'recommends' products which on current prize levels provides an average return of less than inflation..

.But why bother with the truth - just keep kicking advisers for not having crystal balls.

report this

Smithling via mobile

Dec 24, 2012 at 22:09

What's wrong with WP? According to FSA guidance it's home and dry.

Too many people are wrapped in what's good for the client when you should be worrying about what's just good solid blameless advice.

I'll be astonished if this ends up in favour of the client. And to be honest, capital returned? Obviously not a result but hardly a train wreck. No worse than the hundreds of millions of £'s sitting in 0.01% "savings accounts" that the bank offers. Arguably double iterest!

report this

Julian Stevens

Dec 25, 2012 at 12:25

As Paul Howard points out, this news item is so short on detail that it's impossible to post any pertinent comment on the suitability or otherwise of the recommendations given, let alone speculate on the level of commission taken. For all we know, Coutts may have taken just 1% initial commission. Is this a case of the clients complaining merely because these investments haven't performed as well as they'd hoped?

Though it's been many years since I'd consider recommending WP as a medium for growth, I recently reviewed a WP Bond that we arranged for a client back in 2001, with a very reasonable level of income drawn after the first 12 months. I was pleasantly surprised to note how well it's maintained its capital value (more than the sum originally invested, if not by a large margin), even though the yearly reversionary bonus rate has for some years been less than 2%. The saviour of the day has been that the provider in question (Aviva) awards Terminal Bonus on regular withdrawals, which it can do because it involves no liabilities for the future.

What is the collective capital value, currently, of this collection of WP Bonds? For an investment of £650,000 to have provided regular withdrawals as modest as £10,000 p.a. with (one presumes) no capital growth after 11 years (hence the clients' disappointment) seems distinctly odd.

And what was the clients' stated ATR? CFL, one assumes, as with most inexperienced investors, will have been stated resolutely as zero, so any discussions regarding investing their money as opposed to leaving it in cash at a time when interest rates were going down and down would have entailed balancing inflation risk against capital risk.

Were the clients' expectations reasonable? Did they read and make a reasonable effort to take on board the relevant risk warnings? And what is the "further evidence" on the strength of which the FOS has now agreed to review the case?

So many questions and, in this article at least, no answers at all.

report this

leave a comment

Please sign in here or register here to comment. It is free to register and only takes a minute or two.

News sponsored by:

Opportunities emerge as production moves back home


As the UK coalition government strives to rebalance the national economy, so called 'reshoring' looks set to play an increasingly important role in economic recovery.

Today's top headlines

A spotlight on Alastair Mundy


Alastair Mundy met Citywire's Daniel Grote at the London Stock Exchange Studios for a detailed interview about the Investec Cautious Managed fund.


Read more...

Financial Ltd hiring ban could trigger exodus

by Michelle Abrego on Jul 24, 2014 at 08:20

Sorry, this link is not
quite ready yet