Mis-sold Investment Bonds

What is an investment bond?

An investment bond, or guaranteed equity bond, is a lump sum life insurance policy. It’s usually funded as a one-off payment, or single premium, that is then invested across one or more different investment funds of your choice. You can then withdraw a percentage of this bond annually or in a lump sum at the end of the bond’s agreed term, usually at an increased financial value.

How do investment bonds work?

Investment bonds give you the potential to grow your savings over a medium or long-term period. In theory, the value of your investment will rise over time based on the value of your chosen funds.

As your investment bond matures, you can withdraw a percentage of it yearly, usually at a maximum of 5%, though this increases cumulatively each year you don’t make a withdrawal. At the end of your investment bond’s term, you can withdraw your full or remaining investment bond, hopefully with an increased return on investment if your chosen funds increased in value.

However, the amount you receive upon bond maturity, surrender, or your death, depends on how well your investment performs.

In terms of bond length, an investment bond can be set to a fixed term, usually maturing after 5 years or more, or have no set term, allowing you to withdraw your full investment bond at any point. Not all investment bonds require a minimum investment amount, but typical investment bonds are made with a minimum £5,000-10,000.

It’s important to note that, if you don’t wait for your bond to fully mature before withdrawal, you may have to pay something known as a surrender penalty. This is a charge for withdrawing money from your bond in the early stages of investment. On top of this, you may also have to pay various setup charges and switching fees associated with your bond, depending on bond guarantees and providers.

If you believe an advisor sold you an investment bond without advising you correctly, then you may be able to make a claim for mis-sold investment bonds.

How can you be mis-sold investment bonds?

In the past, financial advisors were encouraged to sell customers as many investment bonds as possible. The sale of large quantities of investment bonds came with the addition of large commissions,  bonuses, and the likelihood of continued job retention.

Naturally, this incentive encouraged many financial advisors at the time to advise customers to sign up for investment bonds, even if they were not suitable for their needs or failed to address a particular customer’s requirements. While no longer as common, problems associated with mis sold investment bonds are still present today.

If your financial advisor attempts to sell you an investment bond, they must inform you of all the associated risks and costs. These include things such as:

• Any management charges and surrender penalties
• The associated financial risks of bond investments
• Information on the various investment bond types
• Information on how much you can withdraw from your bond
• Information on the various bond term lengths

Your financial advisor should also never encourage the following:

• Using your pension to fund the investment
• Borrowing money to fund the investment
• Pressuring you in any way to agree to an investment bond

Failure to advise you on any of these when you take out the investment bond could result in you gaining compensation for a mis-sold investment.

If your financial advisor has already sold you an investment bond without informing you of all the risks and costs associated with them, then you may very well have been mis-sold investment bonds and therefore may be able to make a claim.

What to do if you think you’ve been mis-sold investment bonds

If you think you’ve been mis-sold investment bonds, there is a variety of information and identification that will be necessary if you want to make a claim. This should include any information you can provide from when you made the claim, examples of which can include:

• Any or all paperwork from the associated investment and savings
• Evidence of when you were first contacted to discuss the investment opportunity
• Records of moving investments or savings
• Evidence of what the advisor recommended
• A record of those you spoke to while making the investment
• A record of how much you invested or moved

If you don’t have all of this information to hand, that’s not a problem. Having at least some evidence and records of the process is enough to begin the claims process.

How we can help?

Here at The Compensation Experts, we can help you with all manner of financial mis-selling claims, which includes any form of mis-sold investment bonds. If you think you may have been mis-sold investment bonds, you can contact us by filling in our contact form, or call us on  01614138765 to speak directly with one of our friendly, expert agents