Mis-sold With Profit Bonds

If you’ve been mis-sold a with profits bond, you may be able to make a compensation claim.

What are with-profits bonds?

A with profits bond is a financial lump sum related to a life-insurance based investment. Like investment bonds, they’re paid in one go and then the bond is invested in a variety of different funds and asset classes.

As with all investment bonds, with profit bonds still provide a customer with an avenue for income or capital growth on their investment for the bonds term. But unlike more general investment bonds, the value of a with profits bond only changes on an annual basis, based on the performance of underlying investments. At the end of each year, your bond will be reinvested, and you’ll receive a bonus based on its financial performance.

With profit bonds will almost always guarantee a customer some form of limited return on investment, even if your chosen funds don’t perform as well as anticipated. They’re generally considered to be low-risk investments, typically being used as a safer way to invest in things such as commercial property. Their diversification across multiple funds substantially reduces the financial risk for investors but low risk doesn’t mean they’re risk free. There is still a chance you could lose money when investing in with-profits bonds.

If you were not informed of the risks associated with a with profits bond, then you may have been mis-sold the investment. Therefore, you may be able to make a mis-sold with profit bonds claim.

How can you be mis-sold with profit bonds?

There are various charges and penalties that are associated with investing in with-profits bonds. Many are similar to those found with traditional investment bonds but one of most important to be aware of is market value reduction.

Market value reduction is a reduction in the amount paid from a with profits bond, potentially reducing your bonds worth below the value originally invested. While this ensures those who choose to keep their money invested still receive a fair share of the funds value, even if other investors decide to withdraw their bond in extreme market conditions, it negatively affects your investment value overall.

Unfortunately, market value reduction is not always applied when a with profits bond is first invested in. This often leads to investors receiving a penalty on their with profits bond without being informed when an MVR is retroactively applied.

On top of market value reduction, with-profits bonds are also liable to suffer financial penalties for early withdrawal. Bonds usually work on term limits that dictate the earliest point at which you can withdraw your entire investment. If you withdraw your bond before this point, financial penalties can apply.

On more than one occasion, this has misled many investors to believe that they could take an annual income from their savings plan and cash it in whenever you wanted, only to be hit by a financial penalty.

Financial advisors should inform you of these risks and should never do the following:

  • Pressure you in any way to invest in a with profits bond
  • Pressure you into using your pension to make an investment
  • Encourage you to borrow money to make an investment

In the same way you can be mis-sold investment bonds, if you were not informed of the risks and costs associated with investing in a with profits bond, then you may have been mis-sold the investment. This makes you eligible to make a mis-sold with profit bonds claim.

What to do if you think you have been mis-sold with profit bonds

If you think you’ve been mis-sold a with profits bond, there is a variety of important information you’ll need if you want to make a claim. Examples of the information that can help include:

  • Any paperwork relating to the investment or savings used
  • Records of when you were first contacted to discuss the investment opportunity
  • Records relating to the amount savings or investments used or moved
  • Evidence of what the advisor recommend
  • Records of those you spoke with during the investment process

If you do not have all of the information to hand, this is not a problem. Only some of this information is necessary 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, including mis-sold with profit bonds. If you think you or a family member may have been mis-sold a with profits bond, contact us by filling in our contact form, or call us on  01618841451 to speak to one of our friendly expert agents.

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    Am I eligible?

    If you’ve suffered from financial loss as a result of mis-sold with profit bonds, you may be eligible for compensation for loss of finances. You will typically have three years maximum to make a claim, and the earlier you open your case, the more likely you are to win.

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    How much could I claim?

    Our dedicated team of experts will give you an indication of how much you could potentially claim for.
    The amount of financial compensation you can claim depends on the extent of your lost investment. There’s no cap to what you can claim from a negligent firm, and it will likely depend on the size of your initial with profits bond. However, there is a financial compensation limit when going through the Financial Services Compensation Scheme (FCS).

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    How does the process work?

    When claiming financial compensation, it’s important that you know what the process involves. That’s why we make each case as transparent and clear as possible.
    Your solicitor will gather all the evidence related to your claim and notify the negligent party that you wish to begin proceedings. Negotiating on your behalf, your lawyer will keep you up to date every step of the way.

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