Savings Bonds
My wife and I sold our house earlier this year so that we could retire. After taking advice from an IFA we put a substantial sum, in both our names, in the form of Norwich Union saving bonds into KSF IOM, fortunately the bulk went into Irish banks. From what I understand, and please correct me if I am wrong, when we deposited this money we had protection up to £15,000, since the revised guarantee scheme came into effect and after KSF got into trouble, this guarantee has now been withdrawn.
If I am correct this seems to me to be completely unethical to have a guarantee in place and then to withdraw it when you may have to pay out.
Are bond holders also regarded as depositors, as we are quite happy to contribute financially to the Depositors Action Group if our position is also being represented, because it seems at the moment we are last on the list as regards any compensation.
My manx bond
I am new to this group, so not entirely sure if I am in the right place, thanks in advance for any advice.
I was previously a Derbyshire customer and had a 3 year Manx Bond Issue 27; in march 08 I received a letter from KSFIOM saying it was maturing soon. The letter described several options, the first one being doing nothing in which case the account would automatically become a Base Rate Tracker Account, which is what I did (ie I didn't do anything).
I was away from my home for 3 months so when I returned I found 2 statements dated 30 jun 08, both with 0 balances, a platinum offshore access account and a call deposit account. At the time I did not notice the different account numbers, but I was concerned that the balances were zero, so I called to find out what had happened. I spoke with a woman and she explained that the account had been transferred into a manx bond account 64, and she gave me an account number. I explained that having received the letter described above, I chose the 'do nothing' option, expecting my money to be in a penalty free access account, and did not request my account to be transferred into another bond account. She said she would look into it and call me back, and the next day she left a message to say that my money had indeed been transferred into a bond and was not available till 31 march 09. I was not happy about this but as I assumed my money was safe, and I did not need access to it and it was also earning a good rate of interest that I would not pursue the matter further. Unfortunately this has not proven to be the case, and obviously if I had know what was ahead I would have taken further action to obtain my money.
This week I received a statemement for the call deposit account which is still zero, and I have not heard anything else. I do not have a statement regarding the new manx bond, so I am not sure what has happened to it, and from what I can gather on these pages bondholders are not being treated the same as despositers, is that correct.
thanks in advance for any advice/info
Investment Bonds group
There are a lot of common issues for depositors through investment bonds and SIPPs and I am glad this group is established for the purpose.
There has historically been some confusion about the issue of compensation and guarantees etc but I will try to clarify some of, basically we are in new territory in that over the last six months we have seen quite a number of very large and previously very secure institutions get into severe financial difficulty and if I as an IFA or other colleagues have done things for clients which we would have done differently with the benefit of hindsight that is hardly surprising.
The situation for statutory compensation for investment bond investors is virtually non-existent as i understand that one £20,000 compensation payment will be given to the insurance company and that will be dividable among all the depositors. I am not sure of the method of division but it is largely irrelevant anyway.
The claims that some people seem to have made about insurance company are largely irrelevant to this situation as the policyholders protection act (on which this is based) relates only to the failure of an insurance company and the individual holdings within it. If this has been the reason for usng the investment bond route and was central to the advice then there clearly is an issue for an IFA to deal with.
The real solution and fairest outcome would be for the UK government to admit it made a mistake and do the honourable thing and replace the money the FSA appears to got moved out of the banks reach causing the main problem to start with. Failing that I believe the best route for depositors is to seek to put pressure on the insurance companies to offer compensation as I believe they have a very hand in the problem.
Insurance companies operated a panel type arrangement on their offshore bonds and claimed to have vetted the companies on their panel, Standard Life recently admitted that they considered including Kaupthing on their panel but decided it was too high a risk.
Another insurance company admitted to me recently that they were now considering stopping having any sort of panel, another has admitted they feel they now should issue a new wealth warning about the absence of protection on their documents.
I have also established that insurance companies claiming KSF IOM had a Moodys "A" rating were in fact relying on the parental guarantee which it appears they have never actually seen and certainly have not been able to show me a copy of.
Bonds group
Very interesting, your comments on panels of approved investments, that's what my IFA told me, they had to apply and use the investments in the panel. Do you have any written info. on the companies views? Or can you name them?
Investment Bonds Group
I think ones first point of call is the IFA (Independent Financial Adviser)
Most of the bond providers do not deal with the public, only through IFAs.
One of the reasons for this is so that individual circumstances can be examined by the IFA and suitability established.
Since the IFAs are responsible for this advice, I would suggest you read any advice letters carefully.
If they have misrepresented or no-explained this risk factors, you maybe have a claim against them.
There are a number of points in history (zeros, endowments etc.) where the IFAs have shown to have been negligent and have recompensed the people they have advised for any losses they have incurred.
Collect and preserve any advice letters!
Endowment and Split Cap Trusts
Manx person is sadly using this site to propogate his vendetta against IFAs and the above are complete red herrings. On endowments if anyone cares to check the records, insurance company sales staf, banks and building societies were responsible for the vast majority of successful compaints to the FOS and in addition the insurance companies own errant calculations were largely to blame for the shortfall issues. The FSA are still fighting with IFAs to allow the insurance companies to hide their false calculations.
With regard to Split cap trusts, these were only ever used by a tiny minority of IFAs (Bank wealth management arms had far more exposure) and the problems with them stemed from market abuse by a small group of investment management companies most of whom are now defunct.
Manx person please check your facts before you make a fool of yourself on this site.
IFA Misselling potential??
See this post http://www.ksfiomdepositors.org/node/175#comment-14339
There is no vendetta at
There is no vendetta at all.
Whilst the majority of miss-selling claims have been against Bank and Building Societies, there have been plenty of claims against IFAs.
In respect of split-caps against IFA, there have been plenty of complaints here.
The points he makes are that "IFAs didnt sell these" - well if they didn't they have nohing to worry about.
We are talking here about bonds that were sold by an IFA.
If your IFA didnt explain what the bond was, and the risks, and inappropriately selected the investment mix according to you stated risk, the you may have a claim.
Don't be put off from this by IFA's who have a self interest.
Bonds are not sold directly to the public. The IFAs role is to advise on these, unless of course it is clear that they were acting on an execution only basis.
It is telling that some Bond providers wouldn't allow KSF on their panel. A well informed and read IFA would have known about this.
IFA's
My NU Bond was definitely "sold" to me by the IFA and, given my acknolwedged status of "minimal risk" I find it appalling that the investment has been placed with a bank "because historically such banks are secure" and yet there was clearly no knolwedge that there was nothing to prop up by way of compensation in the event of a bank collapse - seems very begligent to me?
Bonds group?
Is a Group needed for this?
yes
yes please, it would be very helpful to pool our knowledge.
Norwich Union Bonds
Similarly I await information on where we stand regarding Norwich Union. No information has been forthcoming from them since the initial letter which was not very informative. I accept they probably do not have any definite ideas on what will happen however I believe they did not have representation at the liquidation hearing on Friday. That was disappointing as you would think that NU would carry some "clout".
My Financial Adviser (who by the way informed me that up to £35k was covered and I have that in writing) has asked for more information from NU and hopes to get a response tomorrow although I am not holding my breath.
Bond guarantees
It seems that there are no guarantees regarding bonds. Norwich Union would only be allowed to make one claim of £20,000 to share amongst everyone. I think this is appalling when it seems that every other depositor is being given some protection at least.
I assume that bond depositors are being left out because IoM residents aren't likely to have offshore bonds and the Manx government are looking after their own.
I appreciate that everyone running this action group has a vast amount on their minds, but is there any way to put pressure on the IoM government to cover all their savers including people with savings in bonds.
My IFA also told me that my bonds would be covered to £35,000.
whats happening with bondholders?
I just wanted to know which insurance company you are with? were with friends provident but hear nothing, stand to lose a hell of alot, our ifa advised on all of this.
"Covered to £35,000"
That was the limit of the UK guarantee until recently. It sounds as if your IFA gave you inaccurate information. If you have that in writing, hang on to it.
I would also ask NU why that
I would also ask NU why that didnt have any representation at the last hearing - why didnt they appoint an advocate as a creditor?