Belgian consultancy Investor Protection has invited investors in life insurance product Twinstar Today to join a coordinated legal proceedings action against Axa Belgium.
Investor Protection claims that Axa Belgium misled both advisers and clients. "The product looks simple but is actually complex," Albert Biebuyck, managing partner at Investor Protection told SRP. "How it works and the risks have never been clearly explained - not to the clients or to Axa's agents."
Twinstar Today, which was launched in September 2007, invests in equities and bonds and offers a lifelong guaranteed monthly income. One of its main advantages stressed by Axa at the time of its launch was the freedom to withdraw the capital invested at any time. However, Axa Belgium failed to mention that the monthly income would be deducted from the nominal invested.
"If the financial markets perform poorly, the availability of capital is an illusion because the capital will have disappeared due to the monthly deductions," said Biebuyck.
According to Investor Protection, the information provided by Axa Belgium contradicts the information provided by Axa France for a nearly identical product. Accumulator Retraite, which was also launched in 2007, clearly indicates that the monthly income is deducted from the capital invested.
"I think that this is because the regulator in France offers more protection," added Biebuyck.
Biebuyck said that the poor performance of the financial markets in recent years has led to investors suffering significant losses. "Some investors have lost up to 40%," he said. "The monthly deductions will probably reduce the capital to zero in due course."
The legal proceedings will be initiated in collaboration with Christophe Steyaert from legal firm Joyn Legal, who specialises in financial law.
Biebuyck said that he is unsure as to how many investors will join the action. "I think that because the product continues to lose money, many investors may join at a later stage."
Investors who are joining the proceedings will need to pay an initial fee of €395. In case of an appeal, an additional fee of €195 will be required from investors who wish to participate.
There will also be a success fee based on the result of the legal proceedings, which will be the equivalent of 16.575% of the compensation obtained.
This is not the first time that Investor Protection has campaigned against structured products in Belgium. Last year, the firm started legal proceedings against KBC in relation to the so-called 5-5-5 bonds.