This is a short message on the subject of the Equitable Life compensation affair.
I think there probably is such a thing as misselling of investments, for example, where grossly misleading claims are made. But such claims would need to be barefaced and wholly out of kilter with any sense of reality. Were an investment adviser to advise you a fund was likely to rise in value by a factor of ten in a year, that would certainly constitute misselling. If he were to advise you it would rise by 30%, and it in fact fell by 20%, that would be within the normal range of risk of investments.
However, even in cases where outrageous claims about investments are made by advisers, the priniciple of caveat emptor comes into play. Would a reasonable person believe that a fund might rise in value by a factor of ten in one year? Unless it could be shown a reasonable person would believe outrageous claims, even blatant “misselling” of this kind ought not to give rise to a legal action.
I am fed up of hearing Equitable Life investors claim they believed their investment could only go up. No reasonable person could think an investment could ever be “a dead cert”.
I would like all compensation claims with respect to Equitable Life to be cancelled. In future, such attempted shakedowns (whether of a company or the state) should be considered as attempted fraud and the investors prosecuted. People have to take responsibility for themselves. Their investments fell in value, but such is life–they have no reasonable claim against the company or the state. To read that HM Treasury is to pay £1.5bn out of general taxation to the investors is intolerable–don’t they realise the country is already indebted?