Barclays will repay customers who invested into risky funds

Barclays’ customers could lose huge sums of money because of the bank’s failure to meet 'high standards'.

The claims of those Barclays'  customers, who made a mistake of investing their life savings in high-risk funds that some time later devaluated, are expected to be quickly resolved after a recent protest meeting which took place at Westminster. Many of the protest’s participants were pensioners who deposited money at their local branch, but afterwards were convinced by a Barclays' sales agent that investing their money into shares would be much more reasonable.

Barclays didn’t ignore the protest meeting, which was attended by nearly eighty customers of the bank and some members of Parliament. Barclays decided to satisfy the complaints by those who transferred their money to risky investment funds such as Aviva Global Balanced Income and Aviva Global Cautious Income.

In addition, those who invested in the Balanced Income fund have fared in the wrong way. It had a 70 per cent weighting in equities, 20 per cent in non-investment grade bonds, and the rest in dubious "buy-write" options. Aviva itself classified it as high-risk. Barclays managed to sell in 2007, advertising it as "lower-risk or balanced". The value of the fund experienced a decrease by nearly 50% during the 12 months period.

Paul Cooper, of Claims-uk.co.uk, which was the one who organised the protest meeting, says that according to rough estimates the number of potential victims could reach five thousand while FOS has received hundreds of claims.

He states that Barclays presented the funds as low-risk and even though it has formally admitted it was wrong in July 2007, it didn’t take any measures in this direction. Thus, thousands of people were left in unstable funds although the bank knew they were absolutely inappropriate for them and which ate up a huge part of their life savings. Unfortunately, the majority of the victims are unaware of the fact that they have a legitimate right to ask for compensation and are convinced that their losses are the result of the credit crunch. Furthermore, those customers who were sold such funds as the Barclays Dynamic Tracker or the Dynamic 70 Tracker must be compensated for the same reasons.

Barclays is about to repay victims their invested capital and interest at 1% above bank base rate within the next few weeks. This news was welcomed by the FOS.
 


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