Bank’s investment plan was reasonable, despite impact of COVID-19

Laurie had $660,000 in term deposits, but in late 2019 she was unhappy with the rates offered by the bank. She asked about alternatives to increase her returns, and the bank referred her to an investment specialist. Laurie met the specialist, who noted she was a conservative investor with a low risk tolerance, and was looking to earn an income while also increasing her capital. He recommended she invest in a conversative fund, and provided a written investment plan with projections of what this might look like in the future, including one table that showed the investment might exceed $1 million by the time Laurie turned 80. The plan said the projections were estimates only, that there was no guaranteed rate of return, and that it was based on numerous assumptions, including the rate of inflation.
August 2023

Laurie was unsure about the plan because she had traditionally stuck to the lowest risk possible. She emailed the specialist asking him to confirm her understanding that she could potentially have $1 million by the time she was 80. He confirmed this was correct, and she agreed to invest her funds in February 2020.

Only weeks later, the COVID-19 pandemic caused a significant drop in the value of Laurie's investment. She was very upset by this, and chose to withdraw from the investment fund, losing $30,000 in the process due to the shift in the market.

Laurie complained that the bank had induced her to make the investment by promising she would have $1 million by the time she was 80. She believed this representation was incorrect because her investment had fallen in value. The bank disagreed that it had made any promise, and said the investment was suitable given her goals and low tolerance for risk. It offered her $1,000 in recognition of their long-standing relationship, but Laurie declined this offer and asked us to investigate.

Our investigation

We reviewed the bank's records about the advice and information it had given Laurie regarding her investments, and agreed with the bank that the fund it had recommended was suitable: it met her investment goals and was very low risk. Her email to the specialist needed to be read in its context: she was referring to a figure from the plan's projections, and the plan clearly outlined that this was an estimate only. Furthermore, the pandemic had reduced the value of the investment, but only time would tell whether it would recover and meet this estimate. The timing of her investment, shortly before the pandemic struck, was unfortunate, but we did not consider this meant the bank's advice was unsuitable, particularly since COVID-19 was an unprecedented event.


Laurie decided to take the bank's offer of $1,000.

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