ScotiaBank - Stock Index - GIC

[verbalks]

My former SO has a ScotiaBank - GIC that is indexed to the SP500 & TSE xx.

Anyway it was automatically renewed last year in September. Due to circumstances beyond her control she needs the money. The specialist at the bank is telling her, short of death there is no way to redeem the GIC early.

I do not believe the specialist at the bank but I have never dealt with GIC before so I have no background in these matters. If anyone has knowledge of these financial product any feedback would be greatly appreciated.

 

[red]

i thought you could but you lose the interest

 

[toolioiep]

Most equity linked GICs cannot be redeemed prior to the final date unless there is a death.

It has to do with the equity link, which is invested in options and not in a simple interest bearing instrument.

Obviously there is a lot more detail to it - but bottom line is you're in for the long haul unless you get a VERY sympathic individual willing to break a lot of regulations on your behalf.

 

[squash500]

My former SO has a ScotiaBank - GIC that is indexed to the SP500 & TSE xx.

Anyway it was automatically renewed last year in September. Due to circumstances beyond her control she needs the money. The specialist at the bank is telling her, short of death there is no way to redeem the GIC early.

Ver, I know these products very well. The problem is the term of the gics. They are either for 3 or 5 years locked-in. What I would do would be to escalate the situation. I would first talk to the branch manager. If this doesn't work get in touch with Scotia's regional manager etc. In other words, just don't rely on what the banking specialist tells you. He/she is probably far down the food chain of command. Also, try to get a Doctor's note or something like that saying the money is desparately needed due to a family emergency etc. Just my opinion .

 

[JohnLarue]

These products are quite expensive.
They take your $ & buy a coupon bearing note.
The coupons are used to buy futures / options on the index.
If the market goes up you get a return equal to the index from the futures / options contract.
If the market goes down, you get your initial investment back from the maturity of the note
The issuing company makes a very healthy spread. (A ridiculous spread)
They only thing preventing individual investors from doing the exact same thing & saving a ton of & is
a) Investment expertise
b) Perhaps enough capital to buy the note @ a good return & enough capital buy a futures / options contract @ the proper return (size matters when buying fixed income). It probably would still work with 10-20K

I guess these products are suitable for an unsophisticated investor who is worried about losing his / she capital. However perhaps they might be better served just buying a govt of Canada note, if they are that worried about losing capital.

These products are not bought, they are sold.
I would not be sold one.

 

[squash500]

I guess these products are suitable for an unsophisticated investor who is worried about losing his / she capital. However perhaps they might be better served just buying a govt of Canada note, if they are that worried about losing capital.

These products are not bought, they are sold.
I would not be sold one.

JL, you are a 100% right. I hate these products with a passion. I buy etfs like the xiu, xfn, and xdv instead. I also buy the xbb for fixed income exposure. I then buy short term gics to hedge the bonds. Who wants to lock in their money for 3 to 5 years. Certainly not me .

 

[verbalks]

JL, you are a 100% right. I hate these products with a passion. I buy etfs like the xiu, xfn, and xdv instead. I also buy the xbb for fixed income exposure. I then buy short term gics to hedge the bonds. Who wants to lock in their money for 3 to 5 years. Certainly not me:.

Well the product was sold to the SO's father (80+). He had a stroke and the thing automatically renewed (for a 1 year term) while he was recovering in the hospital. Now he has some bills, back taxes, hospital bills, etc. The money is now locked in this fuckitty product.

 

[squash500]

Well the product was sold to the SO's father (80+). He had a stroke and the thing automatically renewed (for a 1 year term) while he was recovering in the hospital. Now he has some bills, back taxes, hospital bills, etc. The money is now locked in this fuckitty product.

Verbalks, try to get a note from your SO's Father's Doctor. The fact that the bank automatically renews these things is horrible. Good luck with everything and by all means keep being persistent when dealing with the bank

 

[nicecawk]

has anyone been successful cashing in a LOCKED IN GIC?

 

[squash500]

has anyone been successful cashing in a LOCKED IN GIC?

NC, thank goodness I have never been in that situation but I believe it is possible as the bank might be able to sell the gic to someone else on the secondary market. Of course, the Op won't get any interest but it sounds that the bank has some liability in this particular situation. ie automatically renewing for another year etc. Banks have a lot of discretion in these matters. Again, just my opinion .

 

[JohnLarue]

Well the product was sold to the SO's father (80+). He had a stroke and the thing automatically renewed (for a 1 year term) while he was recovering in the hospital. Now he has some bills, back taxes, hospital bills, etc. The money is now locked in this fuckitty product.

That is unfortunate.
You may try the doctors note, however, that probably will not work. These products generally do not have a secondary market

You may try this
You or your SO may consider asking for an appointment with the individual who sold the product.
Be polite, professional, but firm
1.Ask him/her what are their credentials / qualifications. (write it down as they tell you)
2. Then ask why the note was automatically renewed & was this properly explained to an 80+ year old man. (i.e in writing somwhere)
3. Ask for the name & number of the firms compliance officer.
4. Ask the professional for a zero or low -interest (ie well below market rate)rate loan using the GIC as collateral. This will help the father deal with his cash flow issue. They may offer some help, this could be bad PR for them.
5. If they offer no relief of any kind, ask if he / she feels if it would be appropriate to continue doing business with their firm (now & after the elderly gentleman's estate has be settled).
6. Ask him to provide the contact number for the OSC, and the Superintendent of Financial Institutions as you feel this may be inappropriate & would like to understand completely what the rules of engagement are

You need to weigh the damage in relationship your SO & her father have with the firm vs. the need for financial aid.

You may not get anywhere, however do not stand too close as the sales person is likely to shit their pants.
Even if their conduct is within the rules, they know they will have to spend a huge amount of time dealing with a complaint.

Unless the amount of the note is quite large >20K , it may not be worth the trouble of contacting the above people, however, it does not hurt to ask politely

 

[squash500]

Excellent advice Mr. Larue .

 

[dcbogey]

Well the product was sold to the SO's father (80+). He had a stroke and the thing automatically renewed (for a 1 year term) while he was recovering in the hospital. Now he has some bills, back taxes, hospital bills, etc. The money is now locked in this fuckitty product.

I don't believe BNS has a one year market-linked gic. Perhaps the sales rep tried to contact the father but was unable and renewed it into a 1year term - unethical but it happens all the time. Check the original GIC confirmation, receipt, or whatever BNS calls them, it should say what the renewal instructions were. As others have said, be firm, don't lose your temper and good luck.

 

[verbalks]

I don't believe BNS has a one year market-linked gic. Perhaps the sales rep tried to contact the father but was unable and renewed it into a 1year term - unethical but it happens all the time. Check the original GIC confirmation, receipt, or whatever BNS calls them, it should say what the renewal instructions were. As others have said, be firm, don't lose your temper and good luck.

There was a letter that went out saying that the GIC was going to be automatically renewed for 3 years if the account holder didn't respond by xxx date.

The old guy was had a stroke and no one, at the time, had the power of attorney for his affairs at the time.

 

[squash500]

I don't believe BNS has a one year market-linked gic.

DC, that's what got me confused. I thought that bns only has three year and five year linked market gics. Therefore, why would bns only renew it for one year then? Something about this whole transaction doesn't make sense .

 

[squash500]

Sorry Verbalks as I posted at the same time you did I didn't get to read your last comment before posting. Good luck with everything .

 

[verbalks]

DC, that's what got me confused. I thought that bns only has three year and five year linked market gics. Therefore, why would bns only renew it for one year then? Something about this whole transaction doesn't make sense .

I spoke with SO and there are 3 GICs. The old man took out in 2006 and matures in 2009, and two others where auto renewed to 2010 in September 2007 when the old man was in the hospital.

It seems pretty fucked up to be peddling these products to people that old.

 

[verbalks]

Sorry Verbalks as I posted at the same time you did I didn't get to read your last comment before posting. Good luck with everything .

Thanks to the people who are giving me insight into the situation.

 

[squash500]

I spoke with SO and there are 3 GICs. The old man took out in 2006 and matures in 2009, and two others where auto renewed to 2010 in September 2007 when the old man was in the hospital.

It seems pretty fucked up to be peddling these products to people that old.

I agree with you 100%. Take JohnLarue's excellent advice ----print it out if you have to and go to the bank with it. Good luck .

 

[dcbogey]

I would go directly to the branch manager, explain the situation and ask to have the gic cashed. Try to have as much of the documentation you get your hands on with you. If you don't get what you are asking for, the following link should be helpful. As JohnLarue stated - no one wants to deal with a complaint to the ombudsman!

http://www.cba.ca/en/ViewDocument.asp?docid=262&fl=176&sl=178&tl=

I suspect that BNS has a "customer complaint resolution" process that you may have to go through before the CBA ombudsman will get involved but don't be afraid to drop the hint. Good Luck