CR150 Misselling – complainant not uninformed.

See too: CR, Misselling,

CR150

Misselling – complainant not uninformed.

Background

Due to a decline in his capital investment and monthly benefit, the complainant contemplated changing his life annuity investment with the insurer. According to the complainant, a pensioner, he was reliant on this monthly income and sought a safe investment which would grow and not reduce.

The insurer furnished the complainant with a variety of investment portfolios from which to choose. The complainant opted for a portfolio which the insurer described, inter alia, as:

“aimed specifically at the sophisticated investor who will understand and accept the higher risk when compared to a fixed interest annuity. The level of income will reduce from one year to the next, if the investment returns underlying the bonus rates are lower than the selected income level. Each year the investment account will increase by bonuses added according to the portfolio’s investment performance and decrease by the amount drawn by way of income”.

The investment portfolio to which the complainant had switched continued to perform below his expectations. Consequently he complained to this office that the insurer had ill advised him.

Discussion

In evaluating the facts of this matter the following transpired:

• That the insurer had presented the complainant with a variety of viable options from which to choose, ie, to change selected percentage levels, to switch portfolios or to convert to a conventional fixed interest annuity which carried less risk;

• That the complainant solicited information from the insurer and was duly furnished with same;

• That the information given to the complainant was credible and did not, per se, amount to financial advice;

• That such information was sufficient to alert the complainant to the need for careful management of the annuity and for seeking financial advice;

• That it could not be expected of the insurer’s call centre or actuarial department to provide the complainant with full financial advice when what the complainant required was a careful consideration of his overall financial position;

• That the complainant made a conscious choice to purchase a living annuity instead of a conventional annuity;

• That the insurer duly informed the complainant of the features of the investment portfolio he chose;

• That the risk of capital depreciation inherent in this portfolio was explained;

• That the insurer was obliged to carry out the mandate received from the complainant.

Result

On these bases the complaint was not upheld.

SM/TS
April 2006

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