The customer was disappointed in his return from a capital protected structured product, although the index value had decreased. We reviewed the evidence for a fair outcome.

Bank advises customer suitably despite low return

What happened

Antonio went to his bank because he was disappointed with the interest he was getting on his savings. He wanted a better return.

Antonio met with an adviser who completed a fact find (information gathered about the customer’s circumstances) to assess his circumstances and needs. He was 60 years old, single and retired with a pension that was enough to cover his monthly outgoings. He had around £100,000 on deposit and no other investments. He had no particular need to access his money in the near future and was happy to invest for five or more years. He wanted his money to be secure and wasn’t willing to consider investments where he could get back less than he put in.

On the adviser’s recommendation, Antonio invested £20,000 in a capital protected structured product. It guaranteed to at least return the capital invested at the end of the five-year term. Any growth would mirror the performance of the FTSE 100 index with no caps or restrictions. So if the index was 25% higher at the end of the investment term than it was at the beginning, it would pay out the amount invested plus 25% growth.

When the investment ended, Antonio only got back the money he invested because the value of the index was lower at the end of the term than it had been at the beginning. He complained he was told the investment would generate a good return and said he wouldn’t have invested if he’d understood he wouldn’t get a return on his money.

How we helped

We reviewed the documentation he was given, including the adviser’s recommendation letter and the product literature. We were satisfied this clearly explained how it worked and that it might not generate a return. We thought the product was relatively straightforward.

We also felt the advice was suitable. In particular, the investment didn’t put Antonio’s capital at risk and he was prepared to tie it up for the five-year term. It offered the potential of a better return than the interest he’d been getting. And as he was only investing a small portion of his money and wasn’t depending on interest from his savings to supplement his pension, we felt he was in a position to take the risk of receiving a nil or very low return.

Putting things right

We didn’t uphold Antonio’s complaint.