We are currently representing a number of wealthy clients who have lost money as a result of advice to invest in the AIG Enhanced Variable Rate Fund within the wrapper of an AIG Premier Access Bond. The fund was recommended as an alternative to a deposit account, but it was a much riskier proposition than that. The fund was in fact a unitised fund in which the units were valued by an actuary and the charges were largely unspecified. The risks were simply not explained to our clients. Also, the fund was always sold within the bond wrapper, and investors were told that this offered tax benefits, which in many cases was simply incorrect.
The fund was closed following a run in autumn 2008. Some investors accessed their investments immediately and received approximately 73%. Others accessed half of their investment immediately, allowing the remaining half to be invested in a new Protected Recovery Fund which guarantees to return the full value of the investment if the money is left untouched until 2012.
Losses for those that accessed their investment immediately and received only 73% are obvious. For those that chose the Protected Recovery Fund option the position is less clear. However, losses are significant in either case, particularly given that investments were typically between £1m and £5m.
We are sufficiently confident in the merits of our existing clients' claims that we will generally review potential new clients' papers without charge and accept ongoing instructions on a no-win no-fee basis.
For more information on AIG, please see the AIG FAQ.
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