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Barclays fund switch raised risk for widow

Barclays advised an elderly widow concerned about a fall in her fixed-interest bond to transfer her savings into a fund which could hold up to 40 per cent in equities despite her insisting she wanted capital security.

Park House Financial Services partner Richard Davis, who has taken on the client, says she was put into the Aviva global cautious income fund by Barclays after her Legal & General managed income trust fell in value. In 2002, she had been advised by Barclays to invest in the L&G trust. From January 2006 to June 2007, her investment fell from £59,475 to £53,900, a loss of 9.4 per cent.

Davis says the client, who was recovering from a brain haemorrhage and in remission from breast cancer, was unhappy with the loss and Barclays offered to review her situation. He says she stressed to Barclays that her capital must be secure as she relied on it for income although she would like a better return. On June 27, 2007, Barclays advised her to cash in her L&G bond, which was 100 per cent fixed interest, and invest £53,990 in the Aviva global cautious income fund, which can invest up to 40 per cent in stocks and shares.

Between January and December 2008, the Aviva global cautious fund dropped by 21.8 per cent while the L&G managed income trust fell by 10.3 per cent. Davis says: “If she had been left in the L&G fund, her investment would have lost value but only half the amount that she lost through her Aviva investment.”

The client complained in January this year but Barclays rejected the complaint. It said while the fact-find makes it clear she wanted a better rate of return at the same level of risk, the product sold was suitable for her requirements.

A Barclays spokesman says: “We are dedicated to resolving these cases swiftly, fairly and with due sensitivity.”


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