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selection of some of the investment-related complaints we
have dealt with recently
29/10
firm wrongly informs investors that investment proceeds
were paid into bank account – investors claim compensation
for money withdrawn on the strength of this information
Mr and Mrs E said that when
they met their bank’s investment adviser in May 2002,
he told them that £28,000 – the proceeds of an
investment they had made some years before – had recently
been paid into their bank account.
The couple said that on
the strength of this information they had withdrawn £4,000
from their account and bought a car. But shortly after this,
the bank contacted Mr and Mrs E to say that its information
had been incorrect. Although the couple had
received £28,000 from an investment, this had been
two years earlier and the money had been paid to them at
the time.
Mr and Mrs E then said the
bank should compensate them. They claimed they were now
£4,000 out of pocket because it had misinformed them
about the £28,000. The bank offered them a modest
sum for distress and inconvenience. Dissatisfied with this,
Mr and Mrs E then referred their complaint to us.
complaint
rejected
The bank noted that two days before the meeting with the
adviser, Mr and Mrs E had paid a cheque for £4,000
into their bank account. So it appeared that the couple
had already been planning to buy a car, and had the money
to do so, before they were told incorrectly about the £28,000.
The bank produced evidence
that it had paid Mr and Mrs E £28,000 in November
2000. As far as it was aware, the couple had no reason to
expect any further payments of this size. We therefore wrote
to the couple, asking for more information about why they
had paid in the cheque for £4,000, and why they thought
this second payment of £28,000 was theirs. Mr and
Mrs E did not respond.
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29/11
transfer of personal pension from one provider to another
– delay caused by administrative errors
Ms J wished to transfer
her pension to a new provider (firm B). Firm B told her
she would need to instruct the firm that was currently providing
her pension (firm A) to arrange this. Firm A responded reasonably
quickly, telling her it had contacted firm B with details
of her request.
However, five months later
Ms J had still heard nothing more. When she contacted firm
B to ask what was happening, it said it had no record of
ever receiving any information from firm A.
Ms J then complained to
firm A. It told her it believed the delay was mostly the
responsibility of firm B. However, it accepted that its
own part in the process had taken longer than usual and
it offered her £100 compensation for the inconvenience
she had been caused.
Dissatisfied with this,
she brought her complaint to us.
complaint
upheld in part
We were unable to establish that the transfer details had
reached firm B, even though firm A claimed to have sent
them. But it transpired that the transfer value of Ms J’s
pension had increased over the period. So regardless of
where responsibility lay for not processing the transfer,
she had not suffered any financial loss.
Since we found that
firm A had been responsible for a number of administrative
errors, it agreed to offer Ms J an additional £100
for inconvenience, which she accepted.
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29/12
contract for bond reissued several times because of repeated
errors in personal data – start date of ‘cooling-off’
period not affected
Mr and Mrs C invested a
sizeable sum of money in a bond. But when they received
the contract for their bond, they found that Mrs C’s
date of birth had been stated wrongly and there were several
other errors.
After they complained to
the firm, it sent them a new contract. Unfortunately, this
new contract was also incorrect. Again the couple complained
and again the firm issued a replacement contract. The firm
issued four different replacement contracts before it got
the details right.
At this stage, the couple
told the firm that they had changed their minds and wanted
to cancel the bond, in accordance with the ‘cooling-off’
regulations.
The firm went ahead and
cancelled the bond. However, it treated the cancellation
in the same way as a ‘surrender’. This meant that
instead of giving the couple back all the money they had
put in, the firm gave them back the bond’s market value,
as calculated on the day it received the request. A considerable
period of time had elapsed since the couple had first applied
for the bond, and investment markets had fallen. In addition,
the firm had deducted an ‘early encashment’ penalty.
Very disappointed with the
sum they received, Mr and Mrs C complained again to the
firm. It agreed to reimburse them for the ‘early encashment’
penalty. It also agreed to pay them £600 for distress
and inconvenience. However, Mr and Mrs C thought the firm
should return their original investment in full.
complaint rejected
We did not uphold the complaint. Mr
and Mrs C said they wanted to cancel because they had not
been aware of how the bond was treated for tax purposes.
They said that they had not read all of the information
the firm sent them (including tax information) until they
received the correct version of the contract.
We noted that although
the firm had repeatedly entered some of the couple’s
details incorrectly, the standard information that it had
sent them, including the information about tax, had been
correct. So Mr and Mrs C had the opportunity to check this
when they received the first contract.
The firm had included
a fresh copy of the ‘cooling-off’ regulations
each time it sent a replacement contract. But this did not
affect the date on which the cooling-off period began (the
bond’s commencement date). This had remained the same
on each version of the contract. So by the time the couple
finally received a correct version, and had told the firm
that they no longer wanted the policy, the cooling-off period
had expired.
Information that the firm
had sent the couple made it clear that it would not be liable
for any fall in the bond’s market value if an investor
cancelled the plan after the cooling-off period. We concluded
that the firm had acted fairly and that the £600 it
had already offered Mr and Mrs C as compensation for distress
and inconvenience had been appropriate.
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29/13
customer complains that firm’s practice of ‘rounding’
figures led to loss of one third of a penny – ombudsman
service declines to deal with the complaint
Under our rules, in certain
circumstances the ombudsman service can decline to consider
some types of complaint. The following case illustrates
a situation where we decided to dismiss a case without considering
its merits.
Mr K complained to us about
the firm that provided his personal pension. He said he
was unhappy about the firm’s practice of rounding figures
to four decimal points (for prices) and to three decimal
points (for units) when it provided information about its
pension fund.
When the firm refused to
uphold his complaint, Mr K came to us. He said he had carried
out his own calculations and considered that, as a result
of the firm’s ‘rounding’, he had lost approximately
one third of a penny on a transfer from one fund to another.
Mr K acknowledged that this was a petty sum, but he pointed
out that, over time, his loss would grow.
We told Mr K that it would
not be appropriate or proportionate for us to look into
his complaint, in view of the tiny sum of money in dispute.
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29/14
firm discovers client owns fewer shares than she has instructed
them to sell – it buys additional shares on client’s
behalf in order to fulfil contract – client queries
firm’s actions
Mrs L decided to sell some
of her shares in ABC Ltd. She contacted a share-dealing
firm and asked it to sell £10,000-worth of these shares.
She confirmed that she had a share certificate for 5,555
shares and the firm agreed to sell 4,185 of them to raise
the sum of money she wanted.
However, when Mrs L sent
the firm her share certificate, it discovered that she owned
only 277 shares. The firm had already entered into a contract
to sell £10,000-worth of shares and Mrs L’s instructions
were legally binding.
So the firm bought further
shares in order to fulfil its contract with the buyer. The
firm then deducted the cost of buying these additional shares
from the amount it owed Mrs L.
Mrs L complained to the
firm. She felt that it should have checked exactly how many
shares she had before it made a binding agreement to sell
them. She thought that the firm should either
give her back her 277 shares or
give her the full value of the sale of these shares, without
any deduction for the cost of the additional shares it had
bought.
complaint
rejected
In our view, the firm had no obligation to check how many
shares Mrs L had. Its responsibility was to agree a deal
with her and carry it through correctly. The firm had accepted
her instructions in good faith. And it had acted in accordance
with its published terms and conditions when it bought additional
shares in order to fulfil the contract and charged Mrs L
for them.
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from
the Financial Ombudsman Service
issue 29