How do you know if you have been mis-sold an ISA?
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Individual Savings Accounts (ISAs) have become one of the most popular methods of investment for many people due to the high levels of tax efficiency they offer. Any gains or income earned are protected against income tax, tax on dividends and capital gains tax. This allows investors the opportunity to accumulate large amounts of savings.
However, it has come to light in recent years that a growing number of people have been mis-sold ISAs by financial providers. In many cases this is due to confusion around the different risks involved with cash ISAs and Stocks and Shares ISAs - preventing first-time investors from making an informed decision based on their financial circumstances.
The difference between Cash ISAs and Stocks and Shares ISAs
Cash ISAs and Stocks and Shares ISAs carry different levels of risk.
If you have been advised that both ISAs carry the same level of risk, you may have been encouraged to purchase the wrong product. There are two very different levels of risks involved with each ISA and an individual should be made aware of these before any agreement is made.
A Cash ISA involves little or no risk and is viewed as an efficient savings account. They operate in a similar way to a normal interest-bearing savings account, and as the likelihood of losing any money on this product is very low. It is rare that people are mis-sold this type of ISA.
A Stocks and Shares ISA involves greater risk. The amount of money you can earn with a Stocks and Shares ISA varies greatly depending on the performance of the shares they have been invested into. They can produce higher returns than Cash ISAs. However, they can also make losses. This ISA therefore offers a much higher level of risk. Unless you are informed of the level of this risk and how it compares to a cash ISA, you may have been mis-sold the product.
Identifying if you were mis-sold an ISA
A financial advisor has to take into account a number of factors before recommending the appropriate ISA to suit your circumstances. This includes:
- Providing clear information about the differences between a Cash ISA and a Stocks and Shares ISA, in particular, the levels of risk involved with each.
- Taking into account your current financial situation, experience with ISAs and any existing investments you may have.
- How comfortable you are with higher levels of risk and the impact of a heavy investment loss will have on you.
- The complexity of the investment and the level of risk involved.
- What you planned to do with the investment in the future.
- Anything related to your personal circumstances that could affect your financial status.
When assessing whether you have been mis-sold an ISA, if any of the above was not taken into account, or it was provided in a way that was intentionally unclear, there is a good chance you have the right to claim for compensation.
How to make a claim on a mis-sold ISA
With many years’ experience successfully helping customers who have been mis-sold ISAs, Goodwin Barrett are perfectly positioned to help you make a claim. Our specialist team are available to provide in-depth advice, and if required, can also process a claim on your behalf, relieving the stress of having to manage the situation on your own.
If you would like more information about how we can help you to reclaim some of your investment from a mis-sold ISA, get in touch with our friendly team today on 0808 163 1659, or email enquiries@goodwinbarrett.co.uk. Alternatively, you can enter your details in the form at the top right and we'll call you back.
