Similarities vs Differences of Unit Trusts and Open-Ended Investment Companies

Two of the most common types of investment fund are unit trusts and open-ended investment companies (OEICs). They share many traits, but they also have some important differences.

Both types have proved popular in recent years. This is because they can offer a practical and affordable way for clients to diversify across different asset classes without the pressure of having to routinely make calls on individual stocks and shares. This is particularly true if investors do not have the expertise. Buying units or shares can ultimately provide a much wider spread of investment than an investor could have otherwise achieved with the same amount of money. OEICS have also increased in popularity due to their simplified structure. Many Unit Trusts have converted into OEICS in recent years.

Similarities Between Unit Trusts and OEICs

In many respects unit trusts and Open-Ended Investment Companies are the same. They are both open-ended. The price of each unit also depends on the net asset value of the fund’s investment portfolio.

You can generally choose to have dividends paid to you as income or reinvested in the fund.

Both fund vehicles can invest in a wide range of asset classes, geographies, and sectors.

Unit trusts and OEICs are collective or mutual funds. They both allow the monies contributed by a number of investors to be “pooled” together for investment in the stock market. 

A fund manager also runs both Unit Trusts and OEICS. In addition, both Unit Trusts and OEICS charge fund holders management fees.

Differences Between Unit Trusts and OEICs

The key difference between the two is pricing.

Unit Trusts have an “offer” price at which an investor can buy them, and a “bid” price at which an investor can sell them. OEICs, on the other hand, have a single price. The difference of the two costs, (bid-offer spread) is typically 6-7%. This is an extra cost that an investor must weigh up. Charges for an OEIC are deducted explicitly from the total amount invested.

This leads many to state that OEICs pricing is fairer and more transparent.

Investment in a unit trust involves buying a proportion of the total fund – known as a “unit” – while an OEIC involves buying an actual share in the investment company.

Another subtle difference between the two is that trust law governs a Unit Trust, whereas company law governs an OEIC.

How We Can Help with Unit Trusts and Open-Ended Investment Companies

Here at The Compensation Experts, we work with solicitors who have years of experience with financial mis-selling claims. This means that they can help with the similarities and differences between unit trusts and open-ended investment companies. If you think you may have a potential claim, contact us today by filling in or contact form. Or call us to speak to one of our friendly knowledgeable agents.

Common Reasons Investments are Mis-Sold

The Financial Conduct Authority (FCA) – which regulates financial services and markets in the UK – states that an advisor must sell financial services in a way that is fair, clear, and not misleading. This means that if you have been advised to take out an investment product by a financial advisor in the last 30 years you may have been given poor or unsuitable financial advice. This means that, historically, there may be a lot of reasons investments are mis-sold.

common reasons investments are mis-sold

Common Reasons Investments are Mis-Sold

There are a number of reasons that investments may have been mis-sold. Here are some of the common reasons why:

  • The risks associated with the financial product were not explained to you. The advisor should have assessed your attitude to risk and recommended a product that suits your own risk profile and your capacity to make a financial loss. 
  • An advisor did not give you the correct information, or did not tell you how your money would be invested. They also did not tell you about the risk involved with that investment. So, you ended up with a product that is not right for you.
  • You were not made aware of additional charges and fees which you have incurred following advice. The advisor should provide you with illustrations detailing how the initial and ongoing charges may impact on your investment.
  • The advisor did not assess your personal circumstances. An advisor should consider your personal circumstances such as your income, future financial plans, existing investments, and previous investment experience; so that they can recommend the right product for you.
  • The advisor did not give you the full range of investment options or products.  Some advisors were acting as ‘tied agents’ for their place of work. Consequently, they were only able to recommend products sold by the bank or financial institution they worked for. This means the advisor may not have given you your full range of investment options.
  • You experienced hard sales tactics and felt uncomfortable or pressured into an investment that you didn’t really need or want.

If you have experienced any of these, then you may have been mis-sold the investment and may be able to make a mis-sold investment claim.

How We Can Help

Here at The Compensation Experts, we work with solicitors who have years of experience with financial mis-selling claims. This means that they can help with the most commo reasons investments are mis-sold when making a claim. If you think you may have a potential claim, contact us today by filling in or contact form. Or call us to speak to one of our friendly knowledgeable advisors.

Common Barriers to making a Financial Mis-Selling Claim

When it comes to making a financial mis-selling claim, particularly a mis sold investment claim, there are many barriers that people feel like they come up against. That is where The Compensation Experts are here to help.

Our advisors can guide you through the process of making a claim and help with any barriers that you may come up against. Then, we can get you in touch with one of our expert panel of solicitors.

barriers to making a financial mis-selling claim

Here are some of the common barriers to making a financial mis-selling claim.

The bank will not take the complaint seriously, or instantly decline your complaint

Our experienced experts understand a financial advisor’s obligations when recommending a product. Which means we know what to formally complain about, giving you the very best chance of obtaining compensation

There is too much jargon used in the selling of financial products, which can be confusing for consumers. This can result in a reluctance to formally complain

Our friendly and knowledgeable experts will explain all aspects of the claim in everyday terminology, that is easy to understand

You did not lose your own capital and feel there is no cause to complain

If you broke even on your investment or made a poor or disappointing return you may still be able to claim substantial compensation. This is because you could have made a far better return if they had recommended a more suitable product.

I have lost trust in my bank and do not trust them to deal with my complaint as they should

Financial advisors, working for banks or independently, are regulated for the Financial Conduct Authority (FCA). The FCA impose clear rules and timescales on how firms must deal with complaints and treat customers fairly

I do not have paperwork about the investment and cannot recall the circumstances well

Paperwork and detailed information are often not necessary, as we will gather the full details from the provider and assess this for you. We will then communicate the results to you in clear language

It seems like a lot of work and hassle. I am busy, so I just do not have the time or inclination to make a complaint

At The Compensation Experts a financial expert will do all the work for you. It is a hassle-free process which requires very little of your time.

I do not want to make a complaint and get anyone in trouble

The complaint is made to the company who the advisor worked for so it will not impact on an individual.  Banks and life offices deal with complaints within a separate complaint team.

The company who advised me are no longer trading

We may still be able to submit a claim on your behalf for lost capital to the Financial Services Compensation Scheme (FSCS). Our friendly financial experts will quickly be able to establish whether we could make a claim in this scenario

I will do this myself for free or get a relative to do it for me

Yes, you can do this yourself for free.  Please be mindful that you only get one chance to successfully claim the compensation you could be entitled to.  We will use our experience and expertise to give you the best chance of success with your one opportunity.

I don’t think I will be owed any money

Many consumers hold this belief, and then receive thousands of pounds.  The interest rates before the UK recession were far higher, which means you would have made a very good return in a savings account.  For this reason, you may still have lost out substantially. There can also be substantial interest figures added to the compensation awarded.

How We Can Help with Barriers to Making A Financial Mis-Selling Claim

Here at The Compensation Experts, we work with solicitors who have years of experience with financial mis-selling claims. This means that they can help with any barriers you feel you are up against when making a claim. If you think you may have a potential claim, contact us today by filling in or contact form. Or call us to speak to one of our friendly knowledgeable advisors.