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Barclays creates own benchmark, rejects complaint

Barclays has admitted creating a “hypothetical fund” to calculate the benchmark it used to reject a client’s claim for compensation after being misadvised to invest in Aviva’s global balanced income fund.

Barclays recently admitted it erroneously categorised the fund as balanced rather than adventurous between July and November 2007.

It says it has calculated the underperformance against a benchmark equivalent for a balanced fund and has offered compensation to investors it believes have lost out on this basis.

A compensation form sent to an investor who Barclays advised to invest £300,000 in the fund on November 20, 2007 states: “As the Morley fund has performed in line with or better than the benchmark, no compensation has been offered.”

Barclays offered a £50 “inconvenience payment” to the investor.

From July 1 to November 30, 2007, the Aviva global balanced income fund fell by 5.7 per cent. This compares with the ABI UK balanced managed sector average fall of 1.3 per cent. senior partner Paul Cooper, whose firm is handling a large number of complaints from Barclays clients, says: “It would be logical to look at sector averages to benchmark performance but Barclays created its own benchmark and decided that compensation was not due. This is absolutely appalling practice.”

Park House Financial Services partner Richard Davis, who originally complained to Money Marketing about the advice his clients were given by Barclays, says around 150 disgruntled investors have come forward and estimates this could rise to 5,000.

Barclays says it will not comment on individual cases of investors affected by the advice it gave.


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