Via This Is Money:
A damning dossier outlining how cautious savers had their cash gambled on the stock market has been given to the boss of Lloyds Banking Group and the head of the City watchdog by Money Mail.
The file of complaints highlights how Lloyds TSB salesmen convinced the elderly to tie up thousands of pounds in fiendishly complicated investments by promising outrageous returns of up to 75 per cent.
But these profits never materialised, with many getting just £300 from £40,000 invested over five years. Meanwhile, the bank salesmen who convinced them to open the accounts pocketed upwards of £2,000.
Money Mail raised the alert about these investments three weeks ago. Since then, dozens of similar complaints have flooded in.
And we have grown increasingly concerned that customers are having their complaints about the sales of these products — typically made between 2007 to 2009 — rejected without proper investigation. In some instances, they have had their case turned down within 72 hours of alerting the bank. Many also appear to have been sent standardised letters.
Yet, a small number of victims who refuse to give in have received compensation payouts totalling thousands of pounds.
This week, we handed over our dossier of evidence to Antonio Horta-Osorio, chief executive of Lloyds Banking Group, and Martin Wheatley, the chief executive of the newly formed Financial Conduct Authority — the consumer watchdog arm of the City regulator.
In a meeting with Money Mail, Mr Wheatley said: ‘Thanks to Money Mail, this is the type of information we can look at as the new regulator. We want people to come forward if they feel they’ve been badly treated.
‘We will take a look at your dossier on structured products and see what’s behind it.
‘We obviously can’t make a judgment on this case until we have examined it. But, in general, something went badly wrong with the moral compass of financial companies between 2007 and 2009.
‘We saw a lot of products sold aggressively, and many were expensive, with embedded risk.’
Our file of complaints about Lloyds focuses largely on the sale of the Scottish Widows’ Capital Protected Fund, Protected Capital Solutions Fund and Guaranteed Investment Bond.
These were sold in Lloyds TSB and Halifax branches from 2007 onwards.
Savers, who were mainly elderly, with many in their 70s, were asked to attend meetings in branches.
In most cases, they were contacted after a large sum of cash had arrived in their savings or current account — typically from a house sale, inheritance or pension payment.
The vast majority were loyal Lloyds customers who had been with the bank for decades, but had never before invested in the stock market.Most insisted they wanted to take no risk with their life savings, but claim they were then pressured into betting their money on the stock market in so-called structured products.
These types of investment are mind-bogglingly complicated because although they promise never to lose savers’ money, the actual profit you receive is based on a series of targets being met.
The guarantee of keeping your capital protected means the funds have high charges, and they also pay thousands of pounds in commission to salesmen.
Though savers were promised wild returns of up to 75 per cent, they have returned less than even a poor-paying savings account would have done.
A bog-standard account would have made someone with £40,000 a profit of £13,000 over five years; Lloyds customers have received just a few hundred pounds.
Many of those disappointed by the returns have complained to Lloyds, but have had their concerns fobbed off within days.
In one case, the complaint was sent on a Friday afternoon and already rejected on the Monday.
Worryingly, these customers seem to be receiving letters containing identical formats and language, even though the sale of their particular investment should be unique.Lloyds denies that this is the case. It says it treats each complaint on its individual merits
It was our concerns about the poor handling of complaints that prompted Money Mail to send the dossier to Mr Horta-Osorio.
We have asked for each one to be investigated promptly and in depth, including the cases of customers who have already been rejected. We also asked for a thorough investigation into how these investments were sold because of fears that there may have been widespread mis-selling in branches.
Lloyds says customers may have been wrongly rejected because they complained only about poor performance rather than the way the structured product was sold or whether it was right for them.
Martin Dodds, head of complaints at Lloyds, insists his team attempts to telephone customers to get to the bottom of their gripe — a practice he believes lies behind the bank’s gradually improving complaints record.
‘While complaints of a similar nature may receive similar outcomes, it is not correct to say we adopt a standardised process in relation to any customer issue,’ says Mr Dodds.
‘We strive to deliver fair outcomes for all our customers and we assess each case on an individual basis.’ In a letter of reply to Money Mail editor James Coney, Lloyds chief executive Mr Horta-Osorio said: ‘We take these customer concerns very seriously.
‘Our priority is to listen to our customers and ensure we achieve fair outcomes for all complaints raised with us.
‘We will review the cases you have brought to our attention and will endeavour to resolve the complaints from your readers as quickly as possible.’
‘I trusted the bank implicitly – what a mistake’
Hoodwinked: Kathleen Coackley was coerced into investing her £27,000 savings which returned just £100
Kathleen Coakley, 67, from Cheadle, Cheshire, had popped into a Lloyds branch to talk about a loan to buy a car in 2008.
She was told to speak to a financial adviser. During this meeting, he pulled up her bank details and laughed at the amount of money he saw she had in her account.
She says he then pressured her into investing the £27,000 — which she had saved up for her looming retirement — into the Scottish Widows Capital Protected Fund. She was told it was no-risk and she would make a big profit.
But five years later she had received just £100.
At one point she even questioned Lloyds over the fund’s diabolical performance, but was assured this longterm investment would give a handsome pay-off in the end.
When she complained to the bank, she was fobbed off.
The letter she was sent said: ‘I regret I must inform you I cannot agree we have made an error or failed in our service to you.’
The former nurse (pictured left when she opened her Lloyds account in the mid- Sixties) wrote back a furious reply.
It worked. Ten days later Lloyds agreed to pay her compensation of £4,000.
Lloyds admitted its adviser may not have given her advice that was entirely appropriate for her circumstances since she was so close to retirement.
‘I have never changed banks and have trusted them implicitly with my salary and savings over the years,’ says Mrs Coackley.
‘Not for a moment, despite all the banking horror stories, did I think they would cheat me.
‘When I received such a poor return, I was not only disgusted and disappointed, but very sad that someone I had trusted all these years had let me down so badly.
‘I think that my generation looked to banks as being honourable, trustworthy establishments. ‘How wrong we were.’
OUR DAMNING DOSSIER OF COMPLAINTS
I WAS SEEN AS A SALES TARGET
Sue Graham, 60, from Whitchurch, Shropshire, received £50,000 when her husband John died from cancer. She put it into her Lloyds TSB account, which she had held for 40 years.
In 2009 she received a phone call from Lloyds asking her to come in for an account review. There, a salesman persuaded her to put the whole amount into the Scottish Widows Protected Capital Solutions Fund.
She was told it would make good returns. Three years later, Mrs Graham had made just £724 from this investment. By contrast, the Lloyds salesman got £2,550.
Mrs Graham says she would have opened an ordinary savings account had she known so much would have been lost in commission charges. ‘I trusted the bank, thinking they were there to tell me where best to put my money, but I feel they just saw me as a sales target.’
She complained to Lloyds, but it rejected her concerns. Since Money Mail got involved, she has received £2,827 compensation.
I WAS DECEIVED OVER THE FEES
Nigel Blatchford, 63, from Mynachlogddu, Pembrokeshire, had paid the lump sum from his pension into his Lloyds account.
In 2009, a bank salesman called out of the blue and made an appointment to visit him at home.
At this meeting he was advised to invest £100,000 in the Scottish Widows Protected Capital Solutions Fund. He made only £1,448 in three years — a return of 1.4 pc. The salesman made £5,100 commission.
He complained to Lloyds that he had been misled over how the investment worked, and claims he was told the charges to the salesman would be refunded. Lloyds rejected his concerns.
‘Something needs to be done — this is deception,’ says Mr Blatchford.
WE MADE £94 – THEY TOOK £1,000
Jan Brooke, 55, and husband Peter, 59, who suffers from a long-term illness, started receiving phone calls from Lloyds shortly after Mr Brook put a £20,000 redundancy payout into his bank account. They were talked into meeting a financial planning manager who persuaded them to put the full payout in the Scottish Widows Capital Protected Fund in July 2007.
They were given no other options about where to put their money.
Crucially, they believed the investment was for five years when it was actually for five and a half. So, when they tried to get the money out to pay off their mortgage, they found it was still locked up.
They made a complaint to Lloyds, but this was rejected.
When the investment eventually matured, it had made them £94 over five years; the salesman pocketed £1,000.
‘In the end, Scottish Widows made more money than us,’ says Mrs Brooke, from Birmingham.
‘We’d have been better off paying off some of our mortgage. I feel as if we’ve been treated with total disrespect.’
THEY PREDICTED I’D MAKE £7,000
Anne Cook, 64, from Wolverhampton, received £25,000 in an inheritance.
Shortly afterwards, she was contacted by Lloyds. A salesman persuaded her to put the cash in a Guaranteed Investment Bond. She was given ‘glowing’ predictions that showed she could make £7,000. But six years later Mrs Cook had made just £125.
‘No other investment was explained to me,’ she says. ‘I wasn’t given a choice. Perhaps I was a little innocent, but you accept what you’re told. I feel badly let down.’
£25,500 WAS LOST IN COMMISSION
Another reader, from Bedfordshire, was still mourning the death of her husband in 2010 when she was talked into putting £500,000 in a Capital Protected Fund — generating an enormous £25,500 commission for the salesman. ‘I feel sad and embarrassed,’ she says. ‘As a customer of Lloyds for more than 50 years, I trusted them completely to give me sound advice.’
I MADE £40 – THEY SAID I’M LUCKY
A 64-year-old from Northumberland had been widowed for five years in 2008 and was living on incapacity benefit when she was advised to invest £20,000. In December she was paid a return of just £40.
‘I made sure the adviser was well aware of my circumstances as I had no wish to gamble and couldn’t afford to take any risk,’ she says. ‘When I complained, I was told I was lucky to get back what I put in.’
WE WERE TOLD IT WAS NO RISK
Derek and Bernadette Ashton, from Stockport, Cheshire, invested £26,000 in a Guaranteed Investment Bond in January 2007. Last month they received a return of just £78, despite the Lloyds salesman receiving £3,000 for the advice.
‘We were assured this was a safe investment that would give us the best return with no risk,’ says Mr Ashton, 69. ‘But the adviser had only his best interests at heart.’