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Linked bonds spark fears of misselling

IFAs fear that the recent stockmarket slump could mean many high-income and stockmarket-linked bonds fail to reach their investment targets, leaving policyholders out of pocket and triggering claims of misselling.

The fall in stockmarket indices to which many of the bonds are linked could mean that some policyholders lose their entire investment, as many bonds contain clauses which only allow a 20 per cent decrease in their values. Many of the world&#39s indices have fallen by 30 per cent or more, triggering total or partial loss of capital.

The FSA had issued a second warning over the products in August. It had been concerned the bonds had been bought by consumers not fully aware of their risk profile.

Plan Invest joint managing director Mike Owen says: “I think that stockmarket-linked bonds will be a hot issue in the coming year as many will be failing their terms. Undoubtedly, many will have been bought by people who did not fully understand the risk involved.”

Industry commentator Julian Gibbs says: “You need to watch these products very carefully. IFAs need to be aware of what they have sold. Those investments linked to the FTSE100 should be ok but those linked to individual shares or to the Nasdaq are a disaster.”

An FSA spokeswoman says: “If they have been sold properly, then it is just a performance issue. If they were missold,it becomes an issue for us.”


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Ban on past performance in ads set to be rejected

An FSA panel of experts examining past performance in advertising is expected to reject an outright ban but call for further consultation on standardising the presentation performance in ads. The report, due out this week, is expected to include harsh criticism of current practices. The panel&#39s minority consumer representatives are believed to have pushed for […]

Flight hits out at &#39anti-IFA&#39 stance in review

Shadow Economic Secretary Howard Flight says Ron Sandler&#39s review of the retail savings market proves the Establishment is anti-IFA. Speaking at last week&#39s Institute of Financial Planning Conference in Coventry, Flight slammed the review, saying: “I was shocked the Sandler consultation document contained outrageous Establishment anti-IFA bias.” He accused the review of being “shallow in […]

Exclusive Connections climbs discount steps

Exclusive Connections has designed a four-year stepped discounted-rate mortgage for all borrowers, including the self-employed and first-time buyers.The mortgage is available for loans of up to 95 per cent of valuation and there is no arrangement fee. It offers a 2.5 per cent discount in the first year which gives a current payable rate of […]

Stop the cold-calling

Royal London is pleased to support the petition calling for a ban on cold-calling for pension and investment products. The petition, launched by IFA Darren Cooke of Red Circle Financial Planning and hosted on the Parliamentary website, calls on the Government to ban cold-calling for pensions and investment products. A similar ban is already in force […]


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