Customers attitude to risk when investing - not properly assessed

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Case study

The following case discusses another common situation. The "adviser" when conducting the endowment product sale - fails to properly assess the customers attitude to risk on investments.

Our client n this case wished to complain about a failing endowment policy which was sold in 1989. The policy was supposed to reach a target of £57,000 but was now forecasting a return of £43,000.

The customer quite rightly felt misled because at the time of the endowment sale there was a heavy emphasis on the target being reached and in addition there would be attractive bonuses on top.

The client had been given a familiar sales pitch by the adviser and had certainly been misled regarding the level of risk that he was taking with the investment. The client had only recently decided to act on the shortfall having received yet another warning letter from the endowment company. With time running out to claim (you only have three years to make your complaint following a warning letter) we were happy to assist.

After completing our thorough claims review before presenting the complaint, we realised that the client may not have had his "attitude to risk" properly assessed at the time he purchased the endowment.

Part of the sales process involves direct questioning of the customer to determine their attitude to risk taking so far as investments are concerned. This must be fully recorded and the customer fully aware of the risks associated not only with the endowment concept but with the funds adopted for his/her specific investment.

As part of our claims procedure we obtained a copy of the "Fact Find" document which was prepared at the time of the sale. We found that the salesman failed completely to record the clients attitude to risk. The endowment company agreed to uphold the clients complaint about this and a number of other crucial issues.

The client won £7,651 in redress compensation

More endowment advice:

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