The structured product purchased by the client on the basis of the advice provided had a term of only one year and a coupon of 10%. After six months she was paid CHF 500 and another CHF 500 were paid when the product matured. At maturity, she would also have received the invested capital back if one or more of the three SMI underlyings did not reach or fall below a defined lower price threshold (“knock-in level”). If such an event occurred during the term, the capital was only repaid on maturity if all three shares reached or exceeded the price level at that time that they had had one week before the start of the term of the structured product. This was not the case here, so that the client was allocated a number of the underlying shares with the worst price performance. The number of shares was equivalent to the number of shares which could have been purchased with the capital of CHF 10 000 one week before the start of the product’s term. The allocated shares had already lost considerable value during the term.

The events described above clearly show that the coupon on such a product is by no means a return on capital in the sense of interest, as is sometimes wrongly understood by certain clients. Rather, it is a risk premium with which the investor is compensated for bearing the price risk of the underlying assets associated with the product.

According to the client, she had wanted to sell the shares immediately after their allocation. However, her client advisor recommended that she hold on to them and wait for a possible price recovery. Later, when the shares continued to fall in value, the bank repeatedly made the same recommendation and encouraged her to hope for a price recovery. She had always followed the bank’s advice and had now, with the takeover, lost practically all the capital she had invested. She was of the opinion that she had already received incorrect advice when purchasing the product and had even been deceived. The bank had told her that she was taking virtually no risk with the investment. In addition, the bank had also given her incorrect and incomplete advice during the period when she held the allocated securities in her custody account, so that she had refrained from selling them.

The client explained that the client advisor had justified the recommendation at the time by stating that the three underlyings of the structured product had had a stable price performance and that the product only had a short term of one year. He therefore considered the risk of an event occurring during this period that would result in a share delivery rather than a capital repayment on maturity of the product to be low.

The client advisor’s assessment described by the client did not appear to the Ombudsman to be incorrect or obviously unreasonable in the situation at the time. Her client advisor had not foreseen the global financial crisis, which was ultimately probably the reason for the price distortions of the underlying assets. However, he was by no means alone in this.

Whether the client had been sufficiently informed about the functioning and risks of the structured product could hardly be clarified after 16 years. However, it was established that the client had been given a term sheet for the product as part of the consultation, which listed what an investor would receive in which scenarios. It was not apparent from the documents that the client had already confronted the bank with her allegations before her letter of complaint in March 2023. Since she must have been aware of the risks associated with the structured product at the latest since the shares were allocated to her in 2008, any claims for damages due to incorrect advice that led to the purchase of the product would have been time-barred long ago.

With regard to the client’s allegation that she had repeatedly received incorrect and incomplete advice after the allocation of the shares, it was clear from the documents that the bank’s client advisors had essentially given her assessments about the future price performance of the shares. Such assessment is always associated with uncertainties, as it goes without saying that future price trends cannot be predicted with certainty. If they turn out to be incorrect, this is regrettable for those affected, but does not normally lead to liability on the part of the bank. In the specific case, these assessments could probably not be qualified as obviously unreasonable at the time they were made. The Bank may assume that its clients have knowledge of the general price change and market risks of equity investments. As a rule, these risks must be borne by the investors.

The bank’s liability for a market risk could be discussed if an actual performance guarantee has been issued. However, such guarantees are unusual and it was not apparent that the statements made by the client’s client advisor could have been interpreted in this way.

For these reasons, the Ombudsman considered mediation efforts to be futile and provided the client with a corresponding final note. He regretted the investment losses she had suffered and expressed the hope that his explanations would help her to better understand the situation.