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Black Monday Memories: 'hiding' funds industry attacked

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Black Monday Memories: 'hiding' funds industry attacked

Two big names in financial serves were left decidely disillusioned by the funds industry's disappearing act during the 1987 crash.  

The asset management industry has been met with scathing criticism after being accused of ‘running and hiding’, as brokers reported being unable to trade in funds as the stock markets went into meltdown.

Financial advisers had to field a barrage of calls from panicking investors, who were desperate to sell their fund holdings as equity valuations nosedived.

‘We were trying to sell some of these funds and basically the unit trust companies took the phone off the hook and weren’t answering,’ said Hargreaves Lansdown co-founder Stephen Lansdown.

‘They didn’t deal and they let their clients down. They ran and hid and you can’t afford to do that.’

Alan Steel, the proprietor of Scottish wealth firm Alan Steel Asset Management, said he was visiting a leading fund manager in the City on Black Monday and saw the response first-hand.

‘The phones were off the hook and they all buggered off to an Italian restaurant over the road,’ he said.

However, not all fund industry sales people saw it this way, with one trying valiantly to keep his meetings with advisers.

The inability to trade was in stark contrast to the stock market, where traders frenziedly dumped shares after global losses gathered pace. Demand was exacerbated by the London Stock Exchange being closed on Friday due to the storm, which battered the South East.

Lansdown warned that the unit trust industry avoiding trades will prove damaging to its reputation, with investors already spooked by the sharp sell-off. Investment trusts, which could be still be traded on the day as they are listed could prove to be a big winner from yesterday’s debacle, he added.

 

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