Why might Wealth Management Advisor clients have a claim from the Financial Services Compensation Scheme (FSCS)? The FSCS is there to protect customer investments in the event that their savings are lost as a result of malpractice.
Not in simple cases where investment returns have fallen.
The current level of protection is £85,000. For Wealth Management Advisor investment firms which failed between 2010 and 2019 the cover is £50,000 and for those before 2010 its £30,000.
But this is often a lot less than an investor has lost. So, what else can they do to seek redress?
This is where a law firm may be able to help. But only in certain circumstances. A law firm would always be a better option than a Claims management Company (CMC). They are likely to have more legal expertise, will probably charge less (even when acting on a No Win No Fee basis) and they have Professional Indemnity insurance just in case they end up doing something wrong.
So, when might you be able to claim? According to advice from RPC in FT Adviser (15/5/23), the following circumstances might lead to a claim.
- The investment didn’t do what the paperwork advertised it would do.
- The terms of the investment documentation have not been followed.
- The investment was unsuitable for your personal circumstances.
- There was mismanagement of the investment.
- It was a scam or a fraud.
If you’re lucky the FCA might intervene to assist
As in the case of the collapsed Woodford Wealth management Advisor Investment fund where the focus was on mismanagement of the investments.
The FSCS brings confidence to the market. In the latest survey almost 65% of people said they were confident investing in companies who were covered by the compensation scheme. With over half saying it provided financial security.
But more needs to be done because trust in financial services is still too low and that’s according to Google! Or at least marketing agency Balance who have looked at Google’s Experience, Expertise, Authoritativeness, and Trustworthiness (EEAT) guidelines. They have then applied Google’s tests to the top financial services brands in the UK and scored them out of 10. In terms of market providers, the websites and companies which scored or ranked best were:
- Price Comparison sites
- Consultants and
- Investment companies
And the worst were
- Building Societies
- Insurance companies
Most performed badly on measures relating to trust.
In other news, the Advertising Standards Authority (ASA) has stepped in to ban certain adverts relating to tax refunds. It has rules that adverts by Phillipson Hardwick, Quickly Finance and Total Tax Claims had all made false claims in their latest adverts. In particular the claims that refunds could be calculated online were not accurate, alongside claims of the values of refunds which could be received. Nor did the companies mention that their fees would be deducted from any tax recovered.
There were also issues with the way some of the companies worked. Including signing customers up to long term mandates to run any future refund claims on their behalf. Which many customers didn’t understand.