What on earth is going on

  • colinbeds
  • 15/06/09 31/05/09
  • a depositor
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Posted: Mon, 15/06/2009 - 18:08

Hi
My Grandfather was sold a Trust investment by his Financial Adviser 1 week before his 100th Birthday !! The amount deposited was £ 80,000 on 28th April 2008. By this date there was much information about the instability of Icelandic banks, Kaupthing was mentioned in many of these articles, yet he was still advised to place his money in this trust.
Can someone advise me as to why a so called professional adviser would tell a 100 year old man that investing in a trust fund was the best thing to do, when all he wanted to do was to deposit funds from the settlement of his late wife's' estate somewhere that would be quickly accessible after his death to make prompt payments to his family.
Now it appears that the family will have to wait until we are thought of at some point by the liquidators etc, yet his advisers, as far as I am concerned have acted at best irresponsibly and provided terrible advice, lack of due diligence, duty of care issues, mis-sold, whatever, but something does not ring even about this investment, when there was so much bad publicity well before he was sold this.
I am extremely annoyed for my Grandfather who worked and saved all his life, to be screwed by some adviser out of his savings and wishes for funds.
I presume nothing can be done apart from sitting and waiting while the fat cats get fatter and the rest of us starve !!!!!!!!!!!!!!!!!

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Definitly get legal advice.

  • dawes
  • 24/10/08 31/05/09
  • unspecified
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  • Tue, 16/06/2009 - 22:48

Icelandic banks were very suspect in 2006, an IFA should not have recommended any investment by April 2008.

This article alone is probably sufficient evidence to sue him

http://www.telegraph.co.uk/finance/economics/2783787/Is-Iceland-headed-f...

But you should also check the Economist,


Disgraceful behaviour by IFA

  • adambw
  • 13/10/08 31/08/10
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  • Tue, 16/06/2009 - 07:25

DISGRACEFUL! So sorry to hear your story colinbeds. This smacks of commission chasing over best interests of client. There is still a lot of suspect behaviour in the financial services industry and this sounds like a prime example of such. I am so sorry to hear that your grandfather and family are suffering over this.


Trust Investment

  • Mrs Not Too Happy
  • 12/10/08 31/05/09
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  • Mon, 15/06/2009 - 19:25

I would have seen a couple of issues here;

(1) Was the product correct for a man of almost 100 !

(2) Why Kaupthing ?

I have no idea as to the answer to (1) but as for (2) I would have thought that the IFA just took a quick look at the rates on offer and bunged the money into KSF (IOM) Ltd oblivious to the bad press and the Icelandic wobbles. Like many IFA's it's all about commission and swiftly on to the next case !

Was the IFA negligent - a legal opinion may be money well spent !


What on earth is going on....

  • manx-person
  • 17/10/08 31/05/09
  • not a depositor
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  • Mon, 15/06/2009 - 18:59

The IFA will have sent a "reasons why" letter to your father (unless he undertook the work on an "execution only" basis)

Have a look at the letter and then you should see an explanation of the reasons for the recommendation.

Perhaps for IHT planning purposes? There are products which can reduce IHT exposure which sometimes use excluded property trusts which can result in significant IHT savings.

It is obviously unfortunate for you and everyone else that the investment of the bond (assuming that is what it is) was made in Kaupthing.

I am not saying that the IFA has done a good job, I am just trying to point you to documentation that might help you understand why.

I hope that this helps.


I will have to ask the IFA

  • colinbeds
  • 15/06/09 31/05/09
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  • Mon, 15/06/2009 - 19:25

I will have to ask the IFA for a copy of this letter in my letter of complaint we are now in the process of writing. My main bone of contention is that there are several articles on line, dated well before inception of the fund, citing problems with Icelandic Banks, and one even mentioned Kaupthing in March of 2008, this information would have been available to the IFA yet it was either ignored or not looked at.

Either way, when you are selling a product to someone 1 week prior to his 100th birthday, IHT planning is a bit late, statistically he wouldn't have had a particularly long life expectancy !

Thank You for your prompt response to my post, and I will keep you posted as to the response to our letter when it surfaces.


Making an IFA complaint

  • manx-person
  • 17/10/08 31/05/09
  • not a depositor
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  • Mon, 15/06/2009 - 20:54

Under certain circumstances, assets introduced into an offshore bond "fall out" off the estate for IHT purposes and can be assigned to a non-spouse without an immediate CGT charge or chargeable event, so even for a 100yo they could be effective.

I would look carefully at the advice before you made a complaint. It could be that the planning works, and the "error' has been in the asset selection/lack of diversification.

It would dilute any complaint to complain about things that actually "work" and conversely you don' want to omit any relevant aspects of your complaint.

Prior to making a complaint, its usually a better tactic to ask for a full explanation, which is wasy to do in this case as it is quite plausible to be asking for all this for a 100yo relative.

I.E. fully gather information including the fact find, terms of business, copy of the cancellation letter, reasons why letter etc.


I would also check who the

  • humphrey
  • 10/10/08 01/03/11
  • a depositor
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  • Mon, 15/06/2009 - 22:40

I would also check who the beneficiaries are, and who the trustees are. The trustees have a duty of care to your father (or grandfather, can't remember!) and his beneficiaries. Part of that duty is to spread the fund across a broad base, not just put it all into cash, in one bank.