Dozens of Barclays customers have seen the value of their savings nearly halve after the bank advised them to put their cash into a risky investment.
The investors, many of whom were close to retirement or had already stopped working, were advised to move money from savings accounts or low-risk investments into a high-risk fund.
Barclays’ financial advisers described the Aviva Global Balanced Income fund as being suitable for cautious or balanced investors, but in July 2007 the group reclassified it as being for “adventurous” investors.
Despite this, Barclays’ advisers continued for several months to recommend it to people with a cautious investment outlook.
The fund, which invests in company shares and corporate bonds around the world, has seen its value dive by 43 per cent during the year to the end of February, leaving investors with heavy losses.
David and Sheila Morgan, of Milton Keynes, told a newspaper they had been advised to move £360,000 into the Aviva fund. They have lost £188,000.
Mr Morgan, who is 67 and has banked with Barclays for 50 years, said: “I shouldn’t have trusted their advice. But you put your faith in these people. We’ve worked hard all our lives for this money, so to lose it like this is devastating.”
Barclays has paid compensation to customers who were sold the fund between July 2007 and December 2007, but who were still told that it was for cautious or balanced investors, despite it being reclassified. However, those who were sold the fund before July 2007 have not been offered any compensation.
A Barclays spokesman said: “In July 2007 Barclays introduced a new framework for assessing customer risk appetite.
“Unfortunately, when the change was effected in July 2007, due to an error, the Aviva (previously Morley) Global Balanced Income fund was categorised into our new ‘balanced’ category, rather than our new ‘adventurous’ category, where it should have been placed.
“This error was identified in November 2007 and we proactively contacted all affected clients to sort it out, providing them with several options.”