The incident occurred in May, and multiple attempts to contact Pozitive Energy were unsuccessful, leaving the owner to reverse the payment and cancel the direct debit through their bank.

Over a month later, the issue remains unresolved, with the owner only receiving two emails acknowledging the complaint. Meanwhile, threatening letters demanding the £61,520 payment and warning of potential gas disconnection have arrived.

Troubleshooter Insight

The excessive charge was traced back to the installation of a new smart meter in March of the previous year. Pozitive Energy’s billing system, not updated with the new meter information, issued estimates for a year. When the meter began sending actual readings, Pozitive misinterpreted the data, resulting in the erroneous bill.

Upon investigation, Pozitive Energy corrected the issue and confirmed disconnection would not occur. The £61,520 bill was cancelled after it was discovered that the new meter’s initial reading misled the system into believing the usage was significantly higher.

Pozitive Energy asserted that readings are now accurate and future issues are not anticipated. However, an additional 33 bills totalling £8,481 were mistakenly sent, which have since been cancelled. The actual usage credit of £3,150 was refunded to the customer.

The customer expressed disappointment over the lack of compensation for the stress caused and is hopeful that further action will be taken.

96-Year-Old Unknowingly Paid for Unused Broadband

A 96-year-old man with dementia had been unknowingly paying both TalkTalk and Utility Warehouse for landline and broadband services, despite not having a computer. His power of attorney-holding child discovered the payments while managing his finances.

Contracts with both companies were cancelled, but discrepancies regarding service usage persisted. TalkTalk insisted that the necessary equipment was provided, yet their records showed no broadband usage since 2021. They refunded only the January bill and waived a small fee.

This situation highlights the importance of monitoring vulnerable individuals’ finances to prevent prolonged errors. TalkTalk expressed empathy but maintained that their service availability justified the charges.

For assistance with money-related issues, contact troubleshooter@thetimes.co.uk.

Atterbury mentions his preference for carrying cash, stating, “I like cash and do carry some, but for buying a bus or Tube ticket or at the supermarket I use a debit card. If I’m going round antiques fairs, cash is king, and I’d take £200 in case I see something I really like. I buy mostly and sell a bit, but only as a hobby.”

He avoids credit cards due to his aversion to debt, citing his grandparents’ influence. “I gave them up ages ago because I’m not interested in debt. My grandparents helped me believe that if you want something, you have to be able to pay for it in cash,” he explains.

Recounting his early work experience at 16, Atterbury worked for a puppeteer in a traveling company that set up the Little Angel Puppet Theatre in Islington, which was in a derelict war-bombed church. His fascination with carving wood and making puppets began here.

Atterbury recalls a memorable moment on the Antiques Roadshow in Scotland when a man brought in a peculiar item covered in a black tarry substance, claiming it was a dead dog. The item turned out to be a rare survival, confirmed by a local museum representative.

Another significant moment occurred in Australia when a man presented a wooden box containing a piece of wood reportedly from the keel of Captain Cook’s ship, the Endeavour, valued at around $250,000.

Atterbury’s financial habits include using a Post Office savings book since childhood and enjoying Premium Bonds, which he finds more rewarding than bank interest.

Describing his parents’ financial status, Atterbury shares, “We’re probably about the same. At my age, they owned their houses and were comfortable.”

Discussing wealth, he reflects, “I’ve never felt wealthy. I’ve felt very comfortable such as when I was writing my railway books which were very successful. But when that phase ended, we went back to where we were before.”

The worst financial period for Atterbury was in the early 1970s, struggling with high-interest rates while buying his first flat.

With a prolific career writing about 40 books, he describes the income from writing, lecturing, and television as his pension fund, although he once faced a significant financial setback when a publishing deal fell through.

Atterbury enjoys a mixture of income sources, including cruise ship lectures, which paid well and provided an all-expenses-paid experience.

He proudly owns his house in Weymouth outright and also has a rental property nearby.

Atterbury does not consider himself a capitalist but holds onto some shares handed out by banks and insurance companies long ago.

One of his best investments was in a house, though he doesn’t buy property to make money, but to live in it. A garden design course and subsequent renovations cost £25,000 but resulted in a wonderful garden.

After exiting corporate life in 1981, Atterbury vowed never to work for anyone again after being fired from his last job, a vow he has kept.

If given a windfall, he would pay off the mortgages of family and friends and support museums, galleries, and libraries. Antarctica and a camper van trip around Australia are also on his dream list.

Recent earnings have been declining, with 2021/22 turnover at £27,567 and a profit before tax of £20,772.

Given a hypothetical choice, he would prioritize property investment as a primary necessity, emphasizing the importance of living debt-free.

Atterbury shares a valuable lesson from childhood about the frugality of the wealthy, recounting a cruise where his father’s wealthy friend showed him the value of saving money even in small ways.

Rich people often have money because “they are very mean and very good at money,” Atterbury adds, underscoring a critical difference in financial attitudes.

However, not all tracker funds are created equal, despite similar labels. If you have specific investment goals, it’s crucial to do thorough research.

All tracker funds aim to emulate the holdings and performance of a chosen index, such as the S&P 500 or the Dow Jones.

As I shared last week, about 80% of my investment portfolio is in one global tracker fund, leading many to ask: which one?

This is a valid question. Selecting a tracker fund can be more challenging than choosing an actively managed fund, where a manager picks stocks instead of relying on an algorithm to replicate an index.

According to Trustnet’s data, 225 funds exist in the UK All Companies investment sector, all aiming to invest in UK equities. Yet, their approaches vary significantly, influencing performance outcomes. Over the past year, the best-performing UK All Companies fund grew by 27.3%, whereas the worst declined by 5%.

The differences among trackers are subtler. The initial step is determining which index you want to track. My goal was to build an investment portfolio with a broad tracker at its core for diversified exposure across regions and sectors. This would allow me to add satellite holdings for more targeted investments.

• Best investment platforms for beginners

I chose a global approach. Yet, global indexes often favor US and big tech stocks due to their significant market cap.

To avoid this bias, consider an equal-weighted tracker, which allocates an equal proportion of funds to each stock. However, in a portfolio of 7,000 stocks, each stock would only receive about 0.01% allocation, which might be too insignificant.

While the equal-weight strategy has its merits, I believe that larger, successful companies have earned their status. Thus, allocating more to them makes sense.

I opted for a market-cap weighted approach, meaning the larger the company, the greater its share in the portfolio. For example, Microsoft is the top holding in my fund, representing 4% of assets.

• How to invest £10,000

Diversification comes into play here. The top 10 holdings in my fund constitute 19% of its assets, featuring well-known names like Apple, Nvidia, and Amazon. One could argue this fund is US-centric and tech-heavy.

However, my chosen fund is an ‘all-cap’ fund that includes companies across the market cap spectrum. Smaller companies account for around 5% of assets, unlike many global trackers that exclude them.

In this context, smaller companies can still be worth up to $2 billion, a stark contrast to Apple’s $3.3 trillion valuation. Meanwhile, mega-caps make up 43% of my fund’s portfolio compared to an average of 63% for similar funds. Additionally, my exposure to Asia is higher than average at 17% versus 9.7%.

Although this may seem like fine-tuning, it adds an extra layer of diversification and offers some protection during market fluctuations like those experienced last week.

This is not the sole exposure my portfolio needs to small-caps or Asia, but if it reduces risk away from the dominant tech giants, I’m satisfied.

Next steps involve reviewing annual charges, where lower is preferable. Assess the tracking error to see how closely the fund follows its index. Check assets under management, avoiding overly small funds. Consider the currency (some trade in dollars, affecting returns) and choose accumulation units if you want your dividends reinvested. Decide if you prefer an open-ended fund or an exchange-traded fund for more control over buying and selling.

The final decision is selecting a fund house to manage your tracker. This is akin to choosing a trusted brand for groceries; the difference among comparable trackers from iShares, Fidelity, or SPDR is minimal.

• Are you paying too much for your index fund?

So, which fund did I choose? Many guessed it—it’s the Vanguard FTSE Global All Cap Index. It charges 0.23% (with an additional platform fee), automatically reinvests dividends, and has been performing well for me.

While it’s not the only investment in my portfolio—it’s good to diversify—I’m pleased to use it as the primary building block for my broader investment strategy.

Last September, three significant changes to loan repayments were introduced, affecting students who commenced their university studies in the 2023/24 academic year and onwards.

While no graduate will repay more than the amount borrowed in real terms, the changes mean lower earners will end up paying more under the new plan, whereas higher earners will pay less.

“The burden has been shifted from higher earners to lower and middle-income graduates,” says Tom Allingham, Communications Director at Save the Student.

“This is fundamentally unfair — those who earn more from their university degrees should contribute a larger share, and we shouldn’t be shifting this burden onto lower earners,” he adds.

UK nationals enrolling in undergraduate degree courses can apply for student loans to cover tuition fees and living expenses. Tuition fees vary by university and location within the UK. In England, fees are capped at £9,250, totaling up to £27,750 for a three-year course.

In Wales, fees are capped at £9,000, in Northern Ireland at £4,710, and in Scotland, the cap is £9,250, though Scottish and EU students are exempt from paying.

Maintenance loan amounts depend on your UK’s home country and household income. According to Save the Student, the average maintenance loan is around £6,116 per year.

Interest on your loan starts accruing immediately after you take it out. Repayments are 9% of income over the earnings threshold.

For students starting in 2023/24 and beyond, loans will be repaid under Plan 5, replacing the previous Plan 2.

The first notable change is the extension of the loan write-off period from 30 to 40 years, meaning longer repayment durations, potentially extending into the graduate’s 60s.

Second, the earnings threshold for repayments has been lowered from £27,295 to £25,000, frozen until 2027. Consequently, graduates earning over £25,000 will pay more per month under Plan 5.

The third change reduces the maximum interest rate. Under the old plan, interest included the retail price index (RPI) plus 3%. The new plan charges just the RPI, removing the additional 3%.

Kate Ogden, Senior Research Economist at the Institute for Fiscal Studies, notes that lower earners will be adversely affected, paying more on average due to the extended repayment period and lowered threshold, although the reduced interest rate benefits those who fully repay their loan.

Government forecasts suggest Plan 5 graduates will leave with an average of £43,700 in loan debt, compared to £45,600 for the final cohort of Plan 2 students.

Estimates from Quilter indicate that a graduate on a £30,000 starting salary would pay approximately £6,000 more under Plan 5 (£37,000 total) than Plan 2 (£31,000). Those starting at £40,000 would pay £11,000 more, while a £50,000 starting salary would mean paying £14,000 less. Graduates earning £75,000 would pay £6,000 less under Plan 5.

Repayments are higher under the new plan for both lower and higher earners due to changes in the earnings threshold. Graduates earning £30,000 will repay £450.37 annually under Plan 5, compared to £244.08 under Plan 2, while those earning £40,000 will repay £1,350.36, up from £1,144.45.

“Plan 5 increases pressure on students to repay,” says Ian Futcher, Financial Planner at Quilter. “More of their salary will go towards student loan repayments, stretching their finances further.”

Get more insights and expert advice on university applications in The Sunday Times Good University Guide 2024.

Mark Screeton, CEO of SunLife, highlights that over half of grandparents regularly care for their grandchildren and are as crucial to our childcare infrastructure as any nursery or after-school program. These contributions deserve recognition. Although many grandparents relish caring for their grandchildren without expecting payment, for some, it imposes a financial burden.

Our research indicates grandparents dedicate an average of 18 hours a week — over two full working days — performing tasks like school runs, cooking, cleaning, tutoring, and general childcare. Hiring a nanny for this duration would cost £216 weekly or over £11,000 annually, nearly matching the full new state pension. This estimate excludes additional roles such as chauffeur, chef, cleaner, and tutor.

For grandparents wishing to discuss the value of their support, creating a “grandparenting invoice” with average wage comparisons could highlight the significant unpaid labor they provide.

• ‘I’m 55 and bringing up another four children’ — welcome to granny daycare

It is not just about the time given; 83% of grandparents also spend their own money on childcare, an average of £50 weekly according to our research. Therefore, there is a clear financial cost to their support, which ideally should be reimbursed by the parents if feasible. Our findings suggest grandparents save parents thousands of pounds annually.

The extension of early years childcare funding by the government could alleviate some dependence on grandparents, potentially easing their financial strain. However, parents often struggle to find nurseries with available space, leaving grandparents to fill in the gaps left by the government-funded childcare.

Recognizing grandparents’ essential role, expanding tax-free childcare to include them could be beneficial, particularly for those caring for school-aged children. Meanwhile, grandparents below the state pension age might already qualify for childcare national insurance credits, which can positively impact their pension fund.

No

Isang Awah, part of the University of Oxford’s global parenting initiative, argues against grandparents charging for childcare, stating it could strain family relationships, blur family roles, and negatively impact children’s upbringing.

Grandparent involvement typically strengthens family bonds and encourages a sense of community and continuity. It offers an opportunity for grandparents to connect deeply with their grandchildren, providing emotional support and fostering a nurturing environment. This mutual benefit can enrich relationships immensely.

Monetizing this relationship could alter the family dynamic, making it feel transactional. Awareness among children that their grandparents are paid for childcare might confuse their understanding of family and affect emotional bonds.

Grandparents might also feel compelled to adopt a more professional caregiver role, altering their interactions with grandchildren. Parents might perceive their own parents as prioritizing money over family, potentially causing tension and resentment, especially if only one set of grandparents charges.

• UK childcare costs and financial support for parents

Childcare keeps grandparents physically and mentally engaged and provides emotional fulfillment and purpose. Studies show that time spent with grandchildren benefits the health and wellbeing of grandparents who do not cohabit with them.

Though rewarding, childcare is demanding. Grandparents, though experienced, face new challenges due to age, evolving technology, and generational changes. Therefore, supporting them in managing difficult behaviors and ensuring they don’t overexert themselves is crucial.

Parents should frequently communicate with grandparents to address any issues or necessary adjustments. Resources like the Parenting for Lifelong Health program on the WHO website have proven effective in promoting positive parenting practices and enhancing caregiver-child relationships.

These packaged accounts typically charge monthly fees ranging from £10 to £40, offering perks that can save hundreds of pounds annually if utilized effectively.

However, recent data from Fairer Finance highlights that some fees have surged by as much as 16% over the past two months. NatWest and Royal Bank of Scotland (RBS), for example, raised the monthly fee for their Premier Reward Black accounts from £31 to £36 in June, pushing the annual cost from £372 to £432. These accounts provide worldwide travel and phone insurance, European breakdown cover, fee-free foreign spending, a concierge service for bookings, and access to over 1,000 airport lounges.

Additionally, these accounts offer £10 monthly cashback if you have two direct debits and log into your app. These services are available to NatWest or RBS premier customers, who must have either £100,000 in income, savings, or investments, or a £500,000 mortgage.

At the start of July, Lloyds Banking Group also increased fees for its packaged accounts under Lloyds, Halifax, and Bank of Scotland. For instance, the Silver, Club Lloyds Silver, and Silver Vantage accounts, offering European travel insurance, UK breakdown cover, and phone insurance, saw fees rise from £10 to £11.50 per month (£138 annually).

Halifax’s Ultimate Reward account, which includes worldwide travel insurance, UK breakdown cover, phone and home emergency cover, fee-free foreign spending, and a choice of monthly rewards such as £5 cashback, cinema tickets, or magazines, has gone up by £2 per month to £19 (£228 annually).

Lloyds introduced fee-free foreign spending for some of its packaged accounts. Both Lloyds and NatWest cited rising costs in providing benefits such as insurance and airport lounge access.

James Daley from Fairer Finance remarked, “Packaged bank accounts can offer great value if you use all the benefits. But they can also be a colossal waste of money if you don’t.”

He also noted that recent price hikes might reduce the value for customers not fully utilizing the perks.

According to the Financial Conduct Authority (FCA), there were 12.7 million packaged bank accounts in 2020, and 26% of people surveyed in 2022 had a fee-paying account. Among them, 13% felt they weren’t getting good value for their money.

Since 2013, regulations require banks to send annual statements detailing what’s included in these accounts. This measure followed complaints that customers were sold packaged accounts despite not qualifying for certain insurance perks.

Daley added that the FCA’s consumer duty rules obligate banks to ensure their customers are utilizing the services for which they are paying.

“It’s no longer acceptable for banks to sit back and let their customers get poor value from these accounts,” he said, urging banks to consider downgrading customers to cheaper, lower-frills alternatives if benefits go unused.

If you primarily use travel insurance or phone cover included with your account, it might be more cost-effective to purchase individual policies instead of paying the approximate £140 for a packaged account.

According to GoCompare, insuring the latest iPhone 15 with 128GB storage averages £72 per year. A worldwide travel insurance policy costs around £112 annually, and breakdown cover averages £34.

Check whether you need these extra policies. Sam Richardson from Which? noted, “You might already be getting these benefits through other means, like home insurance covering mobile phones and gadgets, or car insurance including breakdown cover as standard.”

If travel insurance is a key perk, scrutinize the policy details to ensure coverage for specific needs, such as pre-existing medical conditions or ski trips.

Be mindful of age limits: Lloyds’ Silver account doesn’t cover those over 65, while NatWest’s packaged accounts exclude those over 70 unless an additional £75 yearly fee is paid.

A power of attorney appoints a trusted individual (the attorney) to manage someone’s affairs if they are unable to do so. This document requires approval and registration with the Office of the Public Guardian (OPG), which oversees fraud prevention. The Guthrie siblings registered a joint and several power of attorney, enabling each to act independently on their mother’s behalf.

“I thought that once it was registered with the OPG you had everything you needed, but it’s really only the beginning,” said 67-year-old Alison. Each company dealing with the attorney – including banks, law firms, pension companies, doctors, and utility providers – has its own requirements and procedures for handling PoA. It’s often the case that staff members are not completely familiar with these protocols.

Alison faced difficulties with her mother’s HSBC account and ultimately had to visit a local branch to furnish another signature. Managing her mother’s share portfolio proved even more challenging.

Daphne owned shares in around 15 corporations and funds, including Aviva, National Grid, Sainsbury’s, M&S, and Shell. Alison aimed to convert some of these holdings into income to cover Daphne’s £1,475 weekly care home fees in Lincolnshire.

Because the shares were held directly by Daphne, Alison had to undertake extensive administrative work and communication with share registrars like Computershare and Equiniti. Eight months ago, she started this exhaustive process.

• I’m 30 and I have applied for a power of attorney

“There’s a lot of digging to do before you find out who you need to register with,” said Alison. “Often you have to send certified copies of documents; some firms requested my passport, proof of addresses for both me and my mum.” Some companies required these documents to be certified, causing delays when certifications from her accountant weren’t accepted, necessitating solicitor involvement.

“Many firms returned forms for more signatures or requested my brother’s, not understanding that I could act alone,” she added.

There are two primary types of power of attorney: a regular PoA, which is temporary and typically for short-term needs like staying abroad, and a lasting PoA, which is permanent and takes effect when one can no longer manage their own affairs. The latter comes in two forms: health and welfare, and property and financial affairs.

While over 6.85 million PoAs are registered with the OPG, there is no centralized service to register documents across multiple financial firms, unlike the Death Notification Service created in 2018 to aid families in notifying banks and insurers posthumously.

Alison shared, “I have lots of little pieces of paper for each company detailing their needs. A uniform requirement would be more efficient.”

According to a Which? survey of 1,530 attorneys, a third struggled with banks and building societies. Jenny Ross from Which? stated: “Registering PoA with financial entities is far from straightforward. Attorneys frequently encounter a lack of staff knowledge and reluctance to recognize their authority.”

When Pam Hall needed to close her mother-in-law Jean’s O2 mobile phone account in June 2022, the initial email registration was straightforward.

Hall and her husband, Steve, applied for PoA for Jean, who had dementia, in October 2022. Jean entered a care home in December 2022, and the OPG registered the PoA by March. Jean’s affairs, including a Santander bank account and utilities with British Gas and Ovo Energy, were relatively simple. Despite this, Hall encountered difficulties settling Jean’s £1.21 O2 debt through their bereavement line due to security questions.

Hall reflected, “They asked for security questions I couldn’t answer. It was frustrating. Eventually, they let me use Jean’s card, a process that took about 30 minutes.”

O2 emphasized their security checks to protect customer accounts.

Stephanie Parish of Clarion Solicitors in Leeds noted, “The financial system hasn’t adapted to the complexities of life and an aging population. Frontline staff often lack knowledge concerning PoA.”

Since 2015, over 6,000 bank branches have closed, driving most services online. However, Which? found that only 9 out of 21 banks permitted PoA registrations online, with only 6 offering mobile banking access. Nationwide allows online banking for attorneys who are existing customers, whereas HSBC only permits it when the donor does not manage their account online.

Many fixed savings accounts, including those from Raisin UK, SmartSave, and Access Bank, are inaccessible to attorneys.

Tony D’Emanuele, who has managed his mother Georgette’s PoA since 2012, also faced obstacles. When he sought a high-interest account from Atom Bank in March, he was told the process had to be handled via phone. “This adds unnecessary stress when you already have so much on your plate,” he said.

Atom Bank acknowledged the complexity of PoA, suggesting customer support for sensitive cases. Similarly, Skipton Building Society manages PoA only through branches, phone, or mail, citing legal and duty of care requirements.

UK Finance mentioned, “Firms must follow strict regulations when opening accounts and registering PoA. We’ve identified the need for greater consistency and are collaborating with stakeholders to improve the process.”

Each PoA registration costs £82, with forms available on gov.uk. There is a 50% discount for pre-tax incomes below £12,000. Donors can specify the powers included in their PoA, which must be signed in a specific order — first by the donor, then a certificate provider (non-relative or professional), and finally by the attorney, with each signature witnessed.

Though self-application for PoA is possible, those with complex needs should seek professional legal advice.

I’ve been known to keep financial experts busy during holidays. During our Easter break, I left the beach to have a WhatsApp video call with my accountant in our hotel room. It was the end of the tax year, and I hadn’t found time to consult her earlier.

This summer, in quieter moments, I’ll undoubtedly be catching up on my financial admin.

If your thoughts turn to your finances while lounging by the pool, a checklist for your annual financial audit can be invaluable.

Start by examining your portfolio breakdown (available on most investment platforms) to assess its balance. This will show the proportions invested in different asset classes, regions, and sectors.

If you’ve been actively managing your portfolio throughout the year, you might deviate from your original risk level. Market shifts and changes in asset classes can also affect your exposure.

• Best investment platforms for beginners

To rebalance, consider selling high-performing funds and investing elsewhere. If your portfolio has done exceptionally well and you’re nearing a point where you need access to funds, you might want to reduce your risk.

Your portfolio breakdown can also highlight underperforming funds. However, don’t rush to sell them.

To evaluate a losing fund, compare its performance with others in the same category using a relevant benchmark. This will help you determine if your fund manager is underperforming or if market conditions are affecting everyone. If the former, it might be time to reassess or delve deeper into the manager’s strategy.

Fees can significantly impact your investment returns over time. Even a slight difference in fees can have large compounding effects.

The overall charge comprises several elements. Annual platform fees can be flat or based on your investment’s value. Flat fees are beneficial as they stay consistent while your investments grow.

• Best stocks and shares Isas

Evaluate what you’ve paid in trading charges over the year. Fees can add up if charged per trade, so look for platforms offering flat fees or free trading options. Don’t forget fund charges and whether you can get similar strategies for less.

Maximize your tax allowances. This year, you can save up to £220,000 tax-free using pensions and Isas: £200,000 in pensions (using unused allowances from previous years) and £20,000 in Isas.

For children, consider sheltering up to £9,000 per year per child in Junior Isas.

Non-earners can contribute up to £2,880 annually to a pension and receive tax relief at the 20% basic rate, bringing it to £3,600. Contributions can also be made on their behalf.

Hargreaves Lansdown modeled scenarios for someone earning £28,000 annually, contributing the auto-enrollment minimum (5% employee, 3% employer) to their pension from age 22 to 68.

One scenario involved a five-year contribution break. In the other, a partner contributed £2,880 annually during this break. The additional contributions resulted in £67,000 more over the long term.

Consider utilizing other allowances, such as sharing the capital gains tax (CGT) allowance of £3,000 with a spouse or civil partner to maximize CGT exemptions annually.

If your situation has changed since your last review, adjust your strategy. A promotion or higher salary is an opportunity to increase your Isa contributions.

With recent generous savings rates, many have accumulated cash. In June alone, savers deposited £3.4 billion into cash Isas, according to Bank of England data.

However, as savings rates drop following a base rate cut, it might be time to consider investing instead.

Remember, interest rates on cash savings can fluctuate. Historically, investment returns outperform cash in the long run.

Taking a holiday might provide the mental space needed to tackle these important financial tasks.

Enjoy your holiday while strategically boosting your investment portfolio!

Jordan’s investment firm, Pendragon Investment Holdings, alleges that HSBC’s private banking advisers pressured it into investing in the HSBC GIF Global Credit Floating Rate bond fund between 2019 and 2023. The fund was advertised with a mere 1 percent loss risk in a worst-case scenario.

Unbeknownst to Jordan, the fund had exposure to high-risk areas such as the Chinese property market along with investments in Zimbabwe, Russia, and Turkey.

By the end of the investment period last year, the fund had declined by about 10 percent. Simultaneously, HSBC accrued £4.2 million in management fees and interest on the loan taken by Jordan for this investment.

The legal battle, which commenced in the High Court in London last month, underscores the issues surrounding financial advisers who recommend complex products touted as low risk but are actually quite volatile.

Data from the Financial Ombudsman Service analyzed by Oxford Risk shows that complaints about mis-selling and the suitability of financial advice surged from 570 in 2021-22 to 884 in 2022-23. The ombudsman sided with the complainant in 62 percent of the cases last year, an increase from 49 percent the previous year.

Jordan’s case also highlights the risks of accepting investment advice from advisers connected to a single firm. It is advisable to seek help from an independent financial adviser who can offer a wide range of products.

Since 2009, Jordan has been a client of HSBC Private Bank.

In May 2019, HSBC recommended to Pendragon to invest in the HSBC GIF Global Credit Floating Rate bond fund, which involved bonds issued globally. These bonds, generally seen as less risky compared to stocks, are essentially IOUs from companies.

The fund required a minimum investment of £5,000 and was tagged as ‘low-risk’ as per court documents. The four-year investment promised an annual income of about 5.25 percent with 0.33 percent annual charges, returning the original investment upon maturity.

Initially, Pendragon stressed it would only tolerate a 1 percent loss. HSBC reassured that the fund’s primary goal was ‘capital preservation’ and projected potential losses at 0.35 percent under normal circumstances and up to 0.98 percent in ‘stressed scenarios’ like the 2008 financial crisis, with losses beyond 1 percent deemed unlikely.

• HSBC was no help when I lost £120k in a Christmas scam

Pendragon had access to a Lombard loans facility via HSBC’s private bank, which allows wealthy clients to borrow against their liquid assets.

HSBC advised Pendragon to secure £66.7 million to make the investment, warning about potential oversubscription risks. Pendragon eventually invested £46.9 million, earning HSBC £1.3 million in fees and £2.9 million in loan interest over the four years.

However, it was later revealed that the investment wasn’t oversubscribed. An October 2023 company factsheet indicated the fund held $261.7 million (£206.2 million), with Jordan’s investment comprising nearly a quarter of its assets.

Pendragon claims HSBC’s communications, which failed to disclose the fund’s exposure to volatile markets like Russia, Turkey, and Zimbabwe, contained ‘false’ statements made either negligently or without reasonable grounds.

As the fund’s value declined, Pendragon repeatedly inquired about its performance, especially during the 2020 COVID outbreak.

HSBC provided reassurances, attributing losses to a ‘mathematical’ error that would be corrected, urging Pendragon to maintain the investment to maturity and warning of a 0.35 percent penalty for early exit.

From June 2019 to June 2023, the fund dropped 10 percent. By contrast, Blackrock’s Emerging Bond ETF, a ‘higher risk’ emerging market fund, declined only 2 percent over the same period, according to Pendragon’s court submission.

Pendragon contends that HSBC should have advised closing the investment in September 2019, amid significant capital loss or in February 2020 when COVID risks became apparent. At those points, losses would have approximated 1 percent.

Jordan now seeks £4.94 million from HSBC, representing the difference between the bond’s maturity value and his initial investment, excluding the income earned but offset by loan interest and charges.

• HSBC error left me with no money to pay for Mum’s funeral

HSBC declined to comment and has 14 days to respond to the court claims. Requests for comment were also directed to Pendragon’s lawyers and Jordan.

Paul Angell from the investment platform AJ Bell remarked, ‘While most investors won’t be solicited into such funds, it’s crucial never to feel pressured into investments, particularly those you don’t fully understand.’

‘Reputable investment firms’ recommended buy lists can help investors narrow choices, considering management team quality, past performance, price, and fund size,’ Angell added.

• HSBC chairman Mark Tucker knighted in King’s birthday honours

A good financial adviser won’t rush you into investment decisions. Always inquire about product details, charges, and risks, and agree on an adviser’s fee upfront.

Your adviser should provide a suitability letter outlining the advice received and reasons for recommendations. If you disagree or are unclear, ask further questions before proceeding.

If using a discretionary fund management service, ensure satisfaction with the risk level agreed upon at the start of your advisory relationship, typically determined through questionnaires and interviews.