Mis-sold Bond ?

[danash]

A friend of mine has held the proceeds of a house sale in a bank for a number of years while he looks for a new purchase. His bank recently contacted him and 'sold' him an equity bond as the most efficient means to hold the money - it does seem to be capital assured after 5 years. My friend did feel pressured and now that he has seen the house he wants he finds out that the bond is €16K off the original amount invested in January 06. I would suspect that most of this is commission.

First question - is it best advice to tie up money in a bond like this when the fact find should have discovered the intention was to buy property ?

The bank didnt issue the cooling off notice for over 2 months - and even wrote to apologise for the delay in sending out the notice.

Second question - does the cooling off period start from the date of inception of the bond or the date of receipt of the notice ? If the notice wasnt received in time does he have a case for a full refund of the amount ( 600K) - voiding the contract ?


When he contacted the bank about this today they offered to give him a bridging loan to wait until the bond recovers !! - is this best advice ?


How should he progress this - the bank directly ? the ombudsman ? or Joe Duffy ?

 

[PMU]

I think it would be difficult for your friend to argue mis-selling. He left the proceeds of a house sale (600k) in the bank, as you say, ‘for a number of years’ where its value was being eaten away by inflation. This does not seem to indicate that he was in any hurry to purchase a new property. If the bank sold him a capital guaranteed bond it would appear to be looking after his interests in that the capital is guaranteed and he stands to gain an increase based on the value of equities, thus receiving some protecting against inflation. I doubt that the bank deceived your friend over the duration of the bond. That its capital is guaranteed only by holding the bond for 5 years is almost certainly stated in its publicity. Your friend may have had an ‘intention’ to buy a house, the way I have an intention to date Paris Hilton, but his behaviour, by letting money waste away by inflation while property prices increase daily does not indicate any serious intent. So he bought a financial product that met his needs (capital guarantee and possible protection against inflation). His needs have now changed but that does not mean he was mis-sold the product.

 

[danash]

Thanks PMU - he was actively looking for a property during the period in question but is quite particular about where he wants to live and was beaten in a number of bidding wars during this time. He would have been in contact with the bank regarding mortgages as well so they certainly knew of his intentions. I believe this is a totally incorrect product for his circumstances and feel that the bank has mis sold and has usurped his rights regarding the cooling off period. Thanks anyhow