Questions of Cash: Give Lloyds last chance, then contact the Ombudsman

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The Independent Online

Q Does Lloyds TSB, facing a fine from the Financial Services Authority (FSA) for mis-selling Extra Income & Growth Plan investment bonds, mean there could be compensation for people to whom Lloyds TSB sold tax-free growth Peps? MB, France.

The FSA will not confirm it is investigating Lloyds TSB over investment bond sales, but Lloyds TSB does not deny it is being investigated nor that it expects to be fined. The bank says the situation on the investment bonds is product-specific and does not affect other products. But this should not deter you from lodging a complaint if you believe Lloyds TSB mis-sold you a Pep. You should lodge a complaint in the first instance with the bank and if you do not receive satisfaction, appeal to the FSA. Time limits for complaints are six years from the date of sale of the product, or three years from the date at which you realised you might have been a victim of mis-selling. But the Ombudsman is sympathetic to consumers who say they became aware of the risk-based nature of a product only when poor performance became obvious, or when they considered their personal circumstances after a provider had publicity for mis-selling other products.

Q In 1993 I went to Abbey National for a savings product for a nest egg for early retirement. My mortgage was paid off. I was offered only a low-cost, endowment mortgage plan: I was not made aware of the true risks of an endowment. It is a 10-year plan with a target value of £20,000: the total value as at November 2001 was £13,205 and I have had no more information on its performance. I am now awaiting a response to an official complaint to Abbey National. SN, Thetford.

Abbey National rejects your complaint of mis-selling. It says its records show you took out the endowment not as a savings plan, but as a means of repaying an additional loan secured on your property. It believes you were told in your 1993 interview that the endowment's ability to meet its target depended on stock market performance. Abbey National says that based on the information it had, an endowment was not the wrong product for you. It does accept that it failed to give you an update on performance in 2002 and is willing to provide you with compensation of £500. You are entitled to appeal to the Financial Ombudsman Service and, as you will not lose the £500 by appealing, you might as well do this. But Abbey National appears confident of its case and the accuracy of its records. It is strange there has been a misunderstanding of the purpose of the endowment, but this has no apparent material bearing on your situation. Endowment savings plans and endowment policies designed to pay off mortgages enjoy similar tax reliefs.

Q I have invested regularly in the Aberdeen European Technology fund via Egg Investment Supermarkets. Egg has stopped hosting this fund and has given me the option of switching to another fund or selling my holding. The original terms and conditions never mentioned that Egg could discontinue a fund. I already have suffered an 80 per cent paper loss on the original investment, which will be crystallised by withdrawal. ZH, Sutton Coldfield

Egg has transferred your units to New Star, so your loss will not be realised for now. The decision to close this fund was taken because its performance was so poor. Egg says it would not normally take this action, it is not in its interests to limit customers' choice. It says that in the terms and conditions which you and other customers agreed to when you signed up there was a catch-all clause saying all terms and conditions could unilaterally be changed without prior notice. This may sound unreasonable, but Egg says this is essential to deal with any unexpected legislative changes and other events, which apparently includes chronic underperformance.

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