Barclays Wealth in £10k trail dispute with Massow

Barclays Wealth is facing a legal threat over an allegation that it should have provided ongoing financial advice to a client who paid nearly £10,000 in trail commission.

Ivan Massow's trail commission reclaim service, paymemy.com, said it is prepared to fund the action - believed to be the first of its kind - on behalf of a Leicestershire investor.

Richard Muston had £9,800 deducted from an Aviva fund and paid to Barclays Wealth, but claims he received no advice in return, according to the Financial Times.

In 2004, Muston had set up a £200,000 trust fund through an IFA in Birmingham, which was later taken over by Barclays Wealth. Aviva, the fund provider, then paid an initial commission of £5,000 to the IFA.

But Muston said he only recently realised trail commission of 0.5% of the value of his investment was being deducted every year by Aviva and paid to Barclays Wealth.

"I was really quite surprised and angry about this, as I thought trail commission was supposed to pay for ongoing service," he told the FT.

"I've been left on my own. I haven't been offered an annual review or risk profile, yet there have been many times when I have needed advice, particularly during the downturn of 2007.

"I am angry as I would have thought that, if you were being paid about £1,500 a year, you could have done something in return."

Advice firm Massow's, parent company of paymemy.com, said it has heard from many investors who unaware they were paying trail commission and have received no advisory services in return.

Sarah Killick, a chartered financial planner and director at Massow's said it appeared Muston wasn't given a portfolio review or a risk-profile check in seven years, in spite of having made a £200,000 investment.

"We are also exploring the possibility that the IFA had a contractual obligation to offer an ongoing service to clients in consideration of the trail commission provided to the company," she said.

Killick claimed the outcome of this test case could have wider implications.

Barclays Wealth said it was satisfied Muston had been notified of the ongoing trail commission payments - but said paying the trail commission, in itself, did not give Muston access to advice.

"Mr Muston was fully aware of this arrangement and he signed a document to that effect, which clearly laid out the guidance on trail commission. Again, as per industry practice, the trail commission was not for advice - though, by the nature of his relationship with Barclays, Mr Muston was entitled to advice as a matter of course."

Consumer Focus has reissued its advice to investors to check whether trail commission is being deducted from their funds, and to complain if they are not receiving anything in return.