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Timeline of UK Banks Investment Mis-Selling

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Goodwin Barrett Timeline

The high street banks have hit the headlines again and again for mis-selling investment products to their customers, many of whom have lost large sums of money – sometimes their entire life savings – because the likes of Barclays, Lloyds and RBS convinced them to make completely unsuitable investments. The banks have each paid out millions of pounds in fines and compensation, but sadly, it looks as though investment mis-selling will continue to be endemic in 2016.

This timeline gives you the facts, figures, fines and investigations you need to know so you can stay aware and secure in 2016.

2009 – The Financial Ombudsman reports 22,265 investment-related complaints in 2009, a rise of over 9,000 from the previous year.(1) Note – please put references such as (1) in superscript in the infographic, and also please make them jump tags down to the relevant end note

Nov 2009 – This Is Money reports that more than £23 billion worth of structured bond products may have been mis-sold.(2)

Dec 2009 – The Daily Mail reveals that the Royal Bank of Scotland and Natwest received a staggering 1,600 complaints every day from July to December 2009, around 300,000 total.(3)

Jan 2010 – Pension provider Standard Life Assurance Ltd are fined £2.45million by the Financial Services Authority (FSA) for misleading thousands of customers with inappropriate investment advice.(4)

Jan 2010 – The FSA suspends private stockbroker Wills & Co over claims that they did not warn their clients adequately about the risks of their investments.(5)

July 2010 – The Financial Services Claim Scheme (FSCS) pays out £204 million to over 21,000 claimants.(6)

Jan 2011 – Barclays are fined £7.7 million and ordered to pay £60 million in compensation to thousands of elderly customers who have been mis-sold investment products. (7)

May 2011 – The Bank of Scotland are fined £3.5 million by the FSA over high levels of complaints relating to mis-sold investments. The bank is expected to pay out £17 million in compensation.(8)

Nov 2011 – An undercover investigation by consumer group Which? finds that just 5 out of 37 investment advisers across all the main high street banks are providing adequate advice.(9)

Dec 2011 – The FSA fines HSBC £10.5 million for mis-selling investment products to elderly customers in care. The bank expects to pay out £29.3 million in compensation.(10)

Dec 2011 – The Financial Ombudsman publishes figures showing that 7.5% of all new complaints relate to the mis-selling of investment products.(11)

Feb 2012 – Santander are fined £1.5 million by the FSA for misleading customers about the safety of an investment product. Barclays reports a 77% rise in the number of mis-selling complaints made to the FSA since it was fined £7.7 million in Jan 2011.(12)

Sept 2012 – The FSA warns banks that tougher rules will be introduced to crack down on staff bonuses and incentive schemes that might encourage mis-selling. (13)

July 2013 – The Retail Distribution Review – launched by the Financial Conduct Authority (FCA) in early 2013 with the aim of overhauling financial regulation – requires advisers to be educated about the investment products they are selling.(14)

Dec 2013 – Lloyds is fined a record £28 million by the FCA for mis-selling investment products. The bank is widely criticised for pressuring staff to meet high sales targets.(15)

2014 – The Financial Ombudsman reports 19,834 new complaints relating to mis-sold investments in 2013, an increase of over 4,000 from 2011.(16)

March 2014 – The FCA fines Santander £12.5 million over poor investment advice.(17)

Aug 2014 – Research published by The Telegraph finds that bank investment funds consistently underperform when compared to investment products from other firms.(18)

Feb 2015 – A couple are awarded £190,000 in compensation after the Financial Ombudsman recognises they were given unsuitable investment advice by DeVere UK.(19)

March 2015 – The FCA publish a review identifying the sales culture among high street banks as a key aspect contributing to the problem of mis-sold investments in the UK.(20)

July 2015 – The Financial Ombudsman reports that 30% of all investment mis-selling complaints in 2014 and 2015 were made about banks and building societies. IFAs received 13% while individual stockbrokers accounted for 6%.(21)

Aug 2015 – The government and the FCA launch the Financial Advice Market Review, to report before the 2016 Budget. Its aims include ensuring UK customers have access to investment advice regardless of economic or social background, and to ensure “regulatory clarity” for banks and firms.(22)

Aug 2015 – 90% of mortgage brokers polled by Mortgage Strategy believe the FSCS unfairly penalises firms who are operating responsibly. (23)

September 2015 – The FCA reports that the overall number of complaints has fallen – but if you exclude PPI, the previous year saw a dramatic increase in complaints related to investment products. The worst offending banks so far were reported to be Barclays (283,221 complaints), Lloyds (232,971), Bank of Scotland (190,121) and Natwest (144,741).(24)

2016 and beyond –

The banks continue to report falls in profit as a direct result of payments for financial malpractice(25) and some are said to be bringing back incentives in an attempt to turn around falling sales figures.(26) Meanwhile, a House of Commons report criticises current financial regulations and warns that people are still at risk of being “conned out of their life savings”.(27)

Despite years of public scrutiny, record fines and compensation pay outs, investment mis-selling looks set to continue to be a widespread problem among UK high street banks for the foreseeable future.

References:

1) http://financial-ombudsman.org.uk/publications/ar10/ar10.pdf

2) http://www.thisismoney.co.uk/money/investing/article-1682345/Bond-mis-selling-hits-tens-of-thousands.html

3) http://www.dailymail.co.uk/news/article-1268074/RBS-receiving-staggering-1-600-complaints-EVERY-DAY.html

4) http://news.bbc.co.uk/1/hi/business/8469853.stm

5) http://citywire.co.uk/money/fsa-suspends-wills-and-co-after-mis-selling-investigation/a378823

6) http://www.belfasttelegraph.co.uk/business/news/fscs-paid-out-200m-to-investment-claimants-28548582.html

7) http://www.thisismoney.co.uk/money/investing/article-2070805/Investments-mis-selling-How-savers-duped-gambling-life-savings.html

8) http://www.bbc.co.uk/news/business-13541860

9) http://www.thisismoney.co.uk/money/investing/article-2070805/Investments-mis-selling-How-savers-duped-gambling-life-savings.html

10) http://www.theguardian.com/business/2011/dec/05/hsbc-fined-selling-bonds-to-elderly

11) http://www.financial-ombudsman.org.uk/publications/ar15/about.html

12) http://citywire.co.uk/new-model-adviser/news/barclays-investment-complaints-rise-77-after-fsa-mis-selling-fine/a568785

13) http://www.moneywise.co.uk/scams-rip-offs/rip-offs/tough-mis-selling-laws-dont-go-far-enough

14) http://www.fca.org.uk/firms/firm-types/sole-advisers/rdr

15) http://www.moneysavingexpert.com/news/banking/2013/12/lloyds-fined-record-28m-for-mis-selling-are-you-affected

16) http://www.financial-ombudsman.org.uk/publications/ar15/about.html

17) http://www.theguardian.com/money/2014/mar/26/santander-fined-poor-investment-advice

18) http://www.telegraph.co.uk/finance/personalfinance/bank-accounts/11064192/Five-things-never-to-buy-from-a-bank.html

19) http://www.telegraph.co.uk/finance/personalfinance/investing/funds/11400801/Couple-win-back-190000-after-being-mis-sold-high-risk-investments.html

20) http://www.ftadviser.com/2015/03/16/regulation/regulators/fca-warns-of-mis-selling-risk-from-performance-incentives-EzkYZ7ayoWWxmNCVownL3H/article.html

21) http://www.financial-ombudsman.org.uk/publications/ar15/who.html

22) https://www.gov.uk/government/publications/financial-advice-market-review-terms-of-reference/financial-advice-market-review-terms-of-reference

23) http://www.mortgagestrategy.co.uk/9-in-10-brokers-say-fscs-is-in-need-of-reform/

24) https://www.fca.org.uk/consumers/complaints-and-compensation/complaints-data

25) http://www.dailymail.co.uk/money/news/article-3293126/Lloyds-share-price-comes-pressure-ahead-springtime-float-profits-disappoint.html?ITO=1490&ns_mchannel=rss&ns_campaign=1490

26) http://www.thesun.co.uk/sol/homepage/news/money/6660533/Lloyds-Bank-brings-back-sales-targets-for-staff.html

27) http://www.theguardian.com/money/2015/oct/19/mps-warn-of-potential-mis-selling-scandal-over-new-pension-freedoms

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