A financial adviser recommended a capital-protected structured product, but Antonio’s investment performed worse than he expected.
Bank advises customer suitably despite low return
What happened
Antonio, a single, 60-year-old retiree, went to his bank because he was disappointed with the interest he was getting on his savings. He wanted a better return.
He met with an adviser at his bank, who reviewed his financial circumstances and needs. Antonio had a secure pension covering his monthly outgoings, around £100,000 in savings, and no other investments.
He didn’t need any immediate access to his money and was happy to invest for five or more years. He wanted his money to be secure and wasn’t willing to consider investments where he could get back less than he put in.
Based on this, the adviser recommended a capital-protected structured product and
Antonio invested £20,000. It guaranteed the return of the initial £20,000 investment after five years and offered growth linked to the FTSE 100 index with no caps or restrictions. If the index was 25% higher at the end of the term, the product would pay out the amount invested plus 25%.
At the end of the term, the index value was lower than when Antonio invested, so he only got back his original £20,000. Antonio complained, saying he was led to believe the product would deliver a good return and wouldn’t have invested if he’d understood this possibility.
Unhappy with the bank’s response, Antonio brought his complaint to us.
What we said
We reviewed the documentation Antonio was given, including the adviser’s recommendation letter and the product literature. We were satisfied it clearly explained how the product worked, including the possibility that it might not generate a return. We concluded the product was relatively straight forward and the advice given was appropriate for Antonio’s needs.
In particular, the investment didn’t put Antonio’s capital at risk and he was prepared to tie it up for the five-year term. It offered the potential of a better return than the interest he’d been getting.
As Antonio was only investing a small portion of his money and wasn’t depending on interest from his savings to supplement his pension, we felt he was able to take the risk of not achieving a return. We didn’t uphold Antonio’s complaint.