# Mis-sold Investment



## ask73 (10 Sep 2011)

4 years ago I was sold a policy labelled Medium Risk and 4 out of 7 on the riskometer. Today it is labelled High and 6 out of 7 on the riskometer. Any advice. I have written to no avail to one of the larger companies operating here. The policy is down 50% on a substantial amount of money and matures next year.


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## newirishman (10 Sep 2011)

Are you trying to get out of the policy without taking a hit? Is this what you are trying to find out?
If so, not sure if you have any chance. Medium risk doesn't put a cap on you losses, it just means that the probability for loosing money is medium. Given what happened in financial markets in the last 4 years, I am not surprised that the risk has gone up from medium to high, and that you are more likely to experience a loss than not.
From the information in your email I fail to see how you where mis-sold an investment; the fact that the investment went the wrong way is not enough. That's why it is called risk.


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## Marc (10 Sep 2011)

It sounds like you may have a geared property fund?

Can you describe exactly what you are invested in?


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## Brendan Burgess (10 Sep 2011)

Hi Ask

I would think that you certainly have a complaint. 

Did you buy the product through an advisor or directly from the company? 

If a Fact Find noted that you were low risk and you bought a leveraged product as Marc has guessed, then it was misdescribed and you were probably missold.


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## Bronte (21 Sep 2011)

Doesn't look to me like a mis selling case.  As others pointed out there was risk involved, the risk involved a downside.  Otherwise one should have chosen a no risk product.


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## GuitarDave (21 Sep 2011)

Yes based on the information from the OP this is not a case of mis-selling. Certainly what may have been medium risk 4 years ago could be classed as high risk now. 

You were never told that this was a guaranteed fund or that your return was guaranteed to never drop below a certain percentage of initial investment were you?


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## Marc (21 Sep 2011)

I disagree.

If this IS a geared property fund (and we dont know that it is for sure) then it was NEVER medium risk.

Property funds might generally be considered to be a medium risk falling somewhere between bonds and equities.

However the addition of leverage would change the risk of the investment making the investment more risky. Certainly the provider subsequently changing the risk rating would seem to support this view.

Selling a geared property fund as a medium risk would be objectively considered miss selling. Irrespective of subsequent Market events. The investor would not have to make a case for loss arising from taking a risk.

If the contract can be shown to be negligent in terms of the marketing (upon which a prospective investor could reasonably be expected to rely) then prima facie there is a case to answer.


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## GuitarDave (21 Sep 2011)

Marc, The OP needs to provide more details here as nowhere did they say this was a property fund geared or otherwise...A 5 year term would be on the short side as property funds go no?


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## ajapale (21 Sep 2011)

ask73 said:


> 4 years ago I was sold a policy labelled Medium Risk and 4 out of 7 on the riskometer.



Who or what is "riskometer"?


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## Bronte (22 Sep 2011)

ajapale said:


> Who or what is "riskometer"?


 
That's an easy question.  It's a word dreamt up by those who would sell us products in order to fool us into thinking it's up up up, while it's up up up for them but in generally down down down for the investor.


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## Sunny (22 Sep 2011)

GuitarDave said:


> Yes based on the information from the OP this is not a case of mis-selling. Certainly what may have been medium risk 4 years ago could be classed as high risk now.


 
No. A medium risk description when a product is bought should remain medium risk during the life of the product. Market volatility or returns has nothing to do with it. That's not saying a product can't lose money or under perform. Just means the risk appetite shouldn't change.


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## bryanod (22 Sep 2011)

Sunny said:


> No. A medium risk description when a product is bought should remain medium risk during the life of the product. Market volatility or returns has nothing to do with it. That's not saying a product can't lose money or under perform. Just means the risk appetite shouldn't change.


 
"Market volatility or returns has nothing to do with it." Unless the "riskomoter" is absed on something crazy like volatility from standard deviations, and perhaps the "riskometer" places products into "buckets" based on this measure. Of course, if the standard deviation moved higher/lower it would moved upwards/downwards the "riskometer", but nope it couldnt possible change, even CESR wouldnt dream of a product being able to move, and certainly wouldnt introduce legislation (from next year) suggesting such a thing.


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## Sunny (22 Sep 2011)

I have no idea what type of riskometer the OP is talking about but when it comes to the selling of retail products, the regulator would not be happy to see a product sold as medium risk suddenly becoming high risk because the modelling was wrong or market conditions changed. Otherwise I could sell anything to the man on the street.


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## mercman (22 Sep 2011)

Sunny said:


> Otherwise I could sell anything to the man on the street.



And in case you hadn't realised it, that's what happened. No wonder there is a 9 month waiting list in the Ombudsman's office who in reality can't or won't judge on a median basis as the Financial Providers he is supposed to referee on, are paying to keep his office open in the first place.


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## bryanod (23 Sep 2011)

Sunny said:


> I have no idea what type of riskometer the OP is talking about but when it comes to the selling of retail products, the regulator would not be happy to see a product sold as medium risk suddenly becoming high risk because the modelling was wrong or market conditions changed. Otherwise I could sell anything to the man on the street.


 

Well the EU are bringing in just that I'm afraid to tell you. How else can you measure risk but on the past, but past no guide etc etc etc.

"Safe as houses" springs to mind.....


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## Monksfield (26 Sep 2011)

The fact that something has been moved sharply up the risk scale by a provider would not of itself confirm that it was mis-represented . Mercer (the leading firm of pension consultants in Ireland) had been describing Irish Life's Consensus fund (70%+ in equities) as medium-risk for years but has now got it where it should always have been - High. I am not aware of much litigation having resulted.


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