The Association of Investment Trust Companies has defended its position to offer compensation to investors who have lost out whilst investing in splits if they have investments of £16,000 or less. Saying that the intention was never to provide national compensation coverage but merely to cover those who face real hardship.
Our view
Two things, firstly it is commendable that the AITC has established a hardship fund, but in our opinion this is an error to exclude those who have more, one rule for all please.
Our view is this is about no provider or adviser being willing to actually take the blame for not explaining enough the risk with splits.
Secondly, yet again, providers along with advisers have been allowed to sell higher risk investments to people who perhaps did not understand the risks. Did the adviser understand the risks? We think not. It is all well and good when markets are on the way up but as with anything, problems occur when markets go down and people scream 'compensation' because they have lost money. Promises, or inferred promises, that were made by provider or adviser have to be looked at, but it is our opinion, yet again, the Regulator who has failed to protect the consumer.
As with many finance related issues, trying to fix the gate 'after the horse has bolted' is a waste of time and serves nothing more than to bring the financial advisory industry more bad press.
has never advised on or sold a split capital investment trust, need we say more.
Our view on advice is very simple - if an investor does not totally understand the product then the investment does not go ahead.