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Investment Mis-selling News Round-up – July 2019

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It’s always useful to keep up-to-date with the most recent developments in the world of mis-sold investments. Here’s a look at the latest big stories in the UK.

Concerns about investment mis-selling growing over ESG products

Concerns are growing over Environmental, Social and Governance (ESG) products and the way in which they’re being mis-sold to investors.

A recent report revealed that 97 of the 100 financial advisors surveyed said they were either “very or fairly concerned” about the possibility for ESG products to be mis-sold with 31% demanding more transparent product labelling.

One expert stated: “What is clear from the report is that advisors typically agree with their clients’ approach to ESG investments from an ethical standpoint. These clients would be troubled if their money was placed in a fund they subsequently felt did not live up to the claim of being ‘ethical’.”

FSCS protection for investments increasing to £85,000

The government recently backed a scheme to increase financial protection for investors.

The Financial Services Compensation Scheme (FSCS) pledged to safeguard up to £85,000 worth of investments in the event of a financial business going bust. When the safeguard increases it will match the safety net FSCS provides for cash held in a bank, building society or credit union.

FSCS chief executive Mark Neale commented: “Increasing the limit further strengthens financial confidence and means people will have protection for more of their money.”

Investors can make a claim if they made investments based on poor advice, or if the products were mis-sold, mis-managed or mis-represented. The safeguard is also meant to kick in if a company fails and can’t pay back the money it owes to investors.

More mis-sold high-risk investment schemes

Industry leaders believe that the next mis-sold investment scandal is likely to be focused on those who were sold inappropriately high-risk investment schemes.

Several of these were unregulated, leading disappointed investors to lodge a complaint with the Financial Ombudsman. Watch this space for further developments.

Additional stress for LCF investors

London Capital & Finance went under at the start of 2019 thanks to investigations into their business practices. The investigation was launched following concerns that the company was using misleading marketing to encourage people to buy unregulated minibonds.

Their collapse puts around £236 million of investor money at risk, and approximately 11,500 customers stand to lose 80% of their investment. Their stress has been compounded further as they now face tax bills on their failed investments.

Lloyds woes set to continue

Lloyds Bank has been at the heart of the mis-sold investments scandal in recent years and it looks like their track record of negligence isn’t going to change any time soon.

The bank has been forced to repay approximately £10 million to around 200,000 customers who’d failed to receive seven years of interest payments because of an administrative error.

This comes at a time when the bank reported profit losses plus a series of serious security breaches. In 2018, Lloyds Bank had to put aside another £460 million for settling mis-sold investment claims.

With a new wave of mis-selling likely to hit the headlines soon (in the form of SIPPs), the question remains – how much longer can the bank weather this storm?

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