Mis-Sold Investment: Compensation Offered to Retirees

A couple, who invested in a Norwich Union Portfolio Bond in 2000, have been offered compensation after being mis-sold the product by their local branch of Bradford & Bingley. The investment grew by approximately 10% over the five-year term, but a market value reduction (MVR) of £2,413 was applied, leaving the couple with a cheque for £15,464. An investigation by Bradford & Bingley has concluded that the couple were mis-sold the bond, and they are now offering to put them back in the position they would have been in had they never invested. This includes adding interest to their original investment and then deducting the surrender value of the bond.

Key Takeaways:

The couple invested £15,150 in a Norwich Union Portfolio Bond in 2000, advised to do so by their local branch of Bradford & Bingley, who told them the investment growth would be approximately 5% a year.
At the end of the five-year term, the fund value was £17,877, but a market value reduction (MVR) of £2,413 applied, leaving the couple with a cheque for £15,464.
An investigation by Bradford & Bingley concluded that the couple were mis-sold the bond and offered to put them back in the position they would have been in had they never invested.
This includes adding interest to their original investment of £15,150 and then deducting the surrender value of the bond.
The total compensation offered is £4,229.33, which the couple are recommended to accept.
The couple were advised to complain to Bradford & Bingley, but they had not received a response prior to the investigation.

Statistics:

Investment amount: £15,150
Period of investment: 5 years
Projected growth: 5% per annum (approximately)
Market value reduction (MVR): £2,413
Fund value at end of term: £17,877
Cheque value received: £15,464
Total compensation offered: £4,229.33
Interest applied: 1% over base rate

Sources:

The Sunday Times, questionofmoney@sunday-times.co.uk, 2005 (exact format from original source)