View more on these topics

Barclays failed to warn of risk

Clients not told of classification changes

Barclays has admitted failing to inform clients after increasing the risk classification of a number of funds.

In mid-2007, Barclays introduced a new system of assessing client risk appetite and all products it advised on were reassessed in line with the new system.

The risk rating on some funds was increased but the multitied advice arm of Barclays failed to inform clients with money in the particular funds.
Barclays dynamic tracker fund was reclassified as adventurous rather than balanced and the dynamic 70 tracker changed from cautious to balanced.

The risk rating of the Norwich Union balanced distribution fund changed from cautious to balanced. Barclays says that the risk ratings of a number of other funds were also increased without the clients being informed.

Last April, Money Marketing revealed Barclays erroneously categorised the Aviva global balanced income fund as balanced rather than adventurous between July and November 2007, after the introduction of the new classification system.

A Barclays spokesman says: “We did not notify existing customers of the change to the risk classification of the funds.

“We are constantly evaluating and amending our investment processes and only notify clients when there is a material change that affects them. When we introduced our new risk-rating system for clients and products, this did not affect existing clients whose risk appetite was assessed and aligned with appropriate products under the rating system in use at the time.”

Informed Choice managing director Martin Bamford says: “If the risk profile of the fund has changed but the risk profile of the client stays the same, how can it still be suitable?

“Barclays seem more concerned about covering its back over the initial sale rather than ensuring the advice remains suitable for its clients.”

The Financial Ombudsman Service has received a large number of complaints about Barclays’ sale of the Aviva global balanced income fund.

The ombudsman is due to issue guidance shortly to adjudicators on how to handle complaints regarding the suitability of the fund.


Taking stoch of retirement

Stochastic modelling, constructing investment portfolios, two-tier advice and the divide between public and private pensions proved to be the basis of a contentious debate.


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm