Following a review of advice given by its former financial planning service on investment products from 2005 to 2011, Barclays Wealth and Investment Management have been offering compensation to thousands of their clients.
Thousands of pounds in compensation
A letter that was reportedly received by one client concerned advice given in 2007 recommending the AIG Guaranteed Bond. Even though the client did not lose any interest or money for the period that they held the bond, the very fact that the product was deemed unsuitable for the client at the time of recommendation meant that they were offered thousands of pounds in compensation.
The letter went on to explain that even though the client no longer had that investment, the compensation offer was being made in recognition of the fact that Barclays was responsible for the unsuitable advice that was given. The compensation offer was calculated based on the money the client would have received had they instead been recommended a similar, more suitable product. It took into account the difference on the returns between the original investment of the AIG bond and the Bank of England average fixed-rate bond, minus any withdrawals and income that the client had received during the period. On top of that, annual interest of 8 per cent was added from the date the investment was sold to March 2017, plus 45 extra days, with the basic rate tax deducted. The client was given three months in which to decide whether to accept the offer.
This is not the first time Barclays has paid back compensation due to mis-selling investments. More than £600 million was paid back to customers after the mis-selling of two Aviva Income funds in the same time period.
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The financial planning business at Barclays closed in 2011, but Barclays’ proactive review of the advice given during that period shows how critical it is that clients receive suitable investment advice.