The FSA (Financial Services Authority) has notified the Royal Bank of Scotland (RBS), owner of Coutts, that the role of AIG’s Premier Access Bond Enhanced Variable Rate Fund between the year of 2001 and 2008 will be under investigation. RBS has commented it will be “cooperating fully” with the investigation.
It is thought that a very small number, 250 of 72,000 UK based customers invested in the product. The product started having problems in 2008 when AIG had to suspend withdrawls due to the financial crisis.
The bonds were held by high profile investors such as comedian, Frank Skinner, and millionaire founder of Air Miles and Nectar cards, Sir Keith Mills.
After investing an estimated 65 million pounds in AIG, Sir Keith Mills claims he has lost a formidable amount. He has led a well publicized campaign against Coutts, alleging the bonds were sold as “low risk” and “easy access”. The former of which is the main reason AIG ran into problems to begin with. He also claims a large proportion of them were invested in practically non-liquid and risky units. In response to these accusations, Coutts contends these investments carried low risk, but never no risk.
In 2008, to ensure his case maintained its ability to be high profile, he paid for a full page advertisement in nationwide newspapers pushing other unhappy investors to join in to class action type lawsuit.
After publicity and media scrutiny involving several disgruntled investors, the private banking industry as a whole has struggled to rebuild its reputation. Couple that with the entire financial crisis and you get a long road back to “positive” feelings about any institutions.
AIG which practically collapsed during the crisis of 2008, received approximately 182 billion dollars in emergency financial funding.