Lloyds haunted by decade old advice

Lloyds haunted by decade old advice

Lloyds Banking Group has been told to compensate a client for providing unsuitable advice in 2006 and 2008.

A Lloyds client, Ms T, was advised to invest £60,000 in a Guaranteed Investment Bond (GIB) in 2006, and a further £7,200 in a similar product in 2008.

The amounts invested meant around 50 per cent of the clients assets were held in one product and Lloyds said the client was financially in a position to make an investment at the risk level of a GIB.

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But the product performed less well than a fixed rate bond offered by Lloyds.

Ombudsman Tony Moss said he was confident that "on the balance of probabilities" if the client had been made aware of the alternative option of a Lloyds fixed rate bond, then she would have chosen to invest in that instead, which at the time offered a rate of 5 per cent a year.

Mr Moss said: "I therefore currently intend to instruct Lloyds to pay compensation based on this figure for the first three years of her investment.

"It should then use the Bank of England’s rate for bonds of 12 to 17 months maturity from then till Mrs T surrendered the investment in 2012. It should also add 8 per cent simple interest per annum to this loss figure from the date of surrender to the date of settlement of this complaint."

Mr Moss added that the client should, if being advised to choose a risk asset as an investment, have been counselled to spread the capital across a number of investments.

This is the second such incident for Lloyds, after it was recently ordered to offer redress for advice it had provided 19 years ago.

Lloyds Bank is currently considering whether to reintroduce financial planning in its branches, as it looks to grow its pensions business.