After failing to give much of a response to Money Marketing’s original revelations regarding a number of clients who were advised to put their life savings into the single fund, Barclays finally offered what it hoped would be seen as an explanation for the episode.
Following the story being picked up by the BBC, Barclays told us that there had in fact been a slight issue with the fund and that an error had resulted in the fund being categorised as a balanced fund rather than an adventurous fund between July 2007 and November 2007.
Barclays said affected customers would be restored to the position they would have been in had they invested in an equivalent balanced investment of a similar nature (this in itself has created quite a controversy ).
And that was the end of the non-apology. No justification or defence of the fact that in so many of these cases clients approaching or in retirement were advised to cash in all their investments and put them into this one fund.
No excuses or rationale for the central charge of bad advice that was being laid in front of the bank in the form of these complaints.
The Barclays response went on to state that its advisers are paid a flat fee for investment products so there is “no incentive to sell one investment product over another”.
Again the response misses the point. The advisers may or may not have been incentivised to recommend the fund above others through higher commission levels but this statement does nothing to soften the accusations.
There are plenty of other potential biases in the market, not just commission bias. As we have seen so often in recent months the sales culture of large banks can easily create an environment where the needs of the bank adviser to meet their targets takes precedence over the needs of the client.
Although I am not privy to the terms of any multi-tied arrangements, such as the one that took place between Aviva and Barclays, you could imagine a fair amount of pressure was applied to ensure a steady flow of money into the fund.
Whether or not higher commission levels were paid to individual advisers is neither here nor there and looks like another attempt to muddy the waters.
Park House Financial Services partner Richard Davis, who originally complained to Money Marketing about the advice his clients were given by Barclays, says around 200 disgruntled investors have come forward and estimates this could rise to 5000.
A number of these cases are now lodged with the Financial Ombudsman Service.
Barclays still has plenty of explaining to do and may find it harder to fob off the authorities with the same statements it has given Money Marketing.