Compensation for investors mis-led by Barclays
Customers who have been given poor advice about investing their savings
with Barclays should now receive compensation
for the money they have lost. The Financial Services Authority has fined Barclays £7.7 million and the bank will pay up to £60 million in compensation to its customers who invested in its 'Balanced Fund' and 'Cautious Fund' from 2006.
One in seven investors have complained about the poor investment advice
they were given and Barclays bank has apologised and accepts that it has "let customers down".
The main issue is that customers’ investments were put at more risk than they were comfortable with, and when the recession took hold many people lost significant amounts of money. One customer who was looking for a 'cautious to medium' risk investment was advised by Barclays to put £50,000 into the Balanced Fund – within months she had lost £17,000 but later received compensation for the full amount.
Many of the customers affected are retired or nearing retirement
and were absolutely relying on their investments performing well
. So it is quite shocking that, although Barclays discovered as early as June 2008 that customers had been mis-sold investment portfolios
, they still did nothing to stop their agents selling inappropriate investment products.
Margaret Cole of the Financial Services Authority
said: "Thousands of investors, many of whom were seeking to invest their retirement savings, have suffered. To compound matters, Barclays failed to take effective action when it detected the failings at an early stage."
"Because of this, and given Barclays' position as one of the UK's major retail banks, we view these breaches as particularly serious and fully deserving of what is a very substantial fine."
Barclays has already had to pay £17million compensation to customers who received bad investment advice. It’s thought that the bank will have to pay a further £42million compensation to customers, some of whom had put their entire life savings into the funds only to see losses of 40% and 50%. Useful links