Case study – Barclays Bank Fraud October 2012

Case study – Barclays Fraud October 2012

When 79-year-old Ronald Bramley inherited a lump sum in 2007, he gave some away to his children and put the remaining £100,000 in his Barclays savings account. "Straight away Barclays contacted me and said they had noticed I had a large deposit in my account," Bramley says.

"They asked if I would like to invest it."

Bramley and his wife Elizabeth met an adviser in October 2007 at a Southend branch of Barclays and were categorised as having a balanced attitude to risk, despite the couple, then aged 77 and 75 respectively, having little investment knowledge. The Barclays agent persuaded them to invest £25,000 in an Axa Distribution Fund (which had a 55% exposure to equities); £25,000 in an Aviva Balanced Distribution Fund (half of its underlying assets in equities and a third in property); and £50,000 in the ill-fated Aviva Global Balanced Income Fund.
By February 2009, their investments had fallen in value by over £22,000, largely due to the performance of the Balanced Income Fund. "I don't follow stocks, so when I saw the fund had lost money I just presumed it was the credit crunch," Bramley said. "I heard from other people that they'd sold me a pup."
After Bramley complained, Barclays offered compensation of just £8,133, which it had calculated by comparing what the Bramleys would have earned had their cash been invested in the bank's recommended "cautious" fund.
Bramley referred the case to the Financial Ombudsman Service, which upheld his complaint and ordered Barclays to pay back the original capital along with interest set at base rate plus 1%. Bramley now expects the case to be settled in the next few weeks following Barclays' recent announcement.
"I've banked with Barclays since the 1960s and I've never been in the red with them," Bramley said. "I have two small pensions that will finish with me, should anything happen to me, so my savings are to provide security for my wife. The more there is, the more secure she will be. I thought Barclays would look after me."

Author, David Goldman