Compliance
Coutts Faces £8 Million Lawsuit Over Mis-selling Claims From Prominent UK Businessman
Coutts is to face an £8 million ($12.4 million) lawsuit from the high-profile UK businessman Sir Keith Mills over claims that the private bank mis-sold him an AIG investment which went sour after the bailout of the US insurance giant, according to reports.
The claim centres on Sir Keith’s assertion that Coutts advised him to invest in the crisis-hit AIG Life Enhanced Fund as a safe way to protect his capital, which would provide “instant access” to his money. He is thought to have invested over £70 million into the vehicle, along with some £5 billion from other UK investors.
Amid AIG’s troubles the fund was frozen in September 2008 and subsequently closed two months later. After its closure the majority of investors transferred their assets into a recovery vehicle which will mature in mid-2012.
For its part Coutts has always denied any wrongdoing and maintained that the product was sold as “low-risk, not no-risk” investment. The bank has also told WealthBriefing it is confident that no clients will have lost any money once the Recovery Fund has matured. Additionally, it has put measures in place to help clients who require liquidity before 2012 with loans.
Sir Keith’s legal team told Coutts of the coming suit at the end of last week, the Sunday Times reported - a move which is the culmination of a two-year row with the bank. The summer of last year saw Sir Keith launch a second high-profile media campaign against Coutts featuring print advertisements juxtaposing headlines on the declining fortunes of AIG with reassurances about his investments received from the bank at around the same time.
In its defence Coutts has previously emphasised that the unprecedented run on the Enhanced Fund which led to its closure was caused by investor sentiment towards AIG Inc, rather than AIG Life, and that the assets in the fund were not a subject for concern. It has also said that investors were warned that AIG Life might, in exceptional circumstances, defer encashments if a large number of redemption requests were received at the same time.
