We no longer check to see whether Telegraph. To see our content at its best we recommend upgrading if you wish to continue using IE or using another browser such as Firefox, Safari or Google Chrome. Your Money today publishes the shocking account of a couple who lost their life savings, in part because an online stockbroker allowed them to borrow thousands of pounds to invest in shares. The case emerges just as many stockbrokers, which traditionally served wealthy and experienced investors, enter the mainstream.
These brokers now seek to attract savers with smaller pots of money and less experience of the stock market. Despite never having traded in shares before, the couple were given access to thousands of pounds of borrowed cash to invest immediately in As share prices plummeted, Mr Prinzi and Mrs Freitas panicked and tried to use the credit facility to recover their losses.
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The cheapest ways to invest in shares. Cost of investing to tumble this week. But the first-time investors soon became embroiled in a vicious cycle: Using the account without any experience or advice destroyed our life. They moved to Portugal, where they now live, as a result of the losses. The credit tool in question is available to all investors, regardless of age, expertise or wealth, who open a MarketMaster account.
Subsequently, the more they invest, the more they can borrow. This is designed to allow investors to grab stock market opportunities if their account balance is low. But it also allows for extreme risk-taking — accidental or intentional — whereby savers can borrow multiple times before repaying the debt.
Posts on internet forums suggest that other novice investors, including students, have suffered after using the credit tool this way. Such cases raise questions about whether inexperienced investors should be given access to high-risk trading tools, often when they have not been requested and when the consequences can be so extreme.
Barclays insisted its tool was never intended to be used in the manner adopted by Mr Prinzi and Mrs Freitas and cited only a handful of similar complaints. If share prices fall and their money is called in, investors are finished. The Financial Conduct Authority, the City regulator, will within months publish an investigation into whether DIY investing services should improve to stop customers making grievous mistakes.
A spokesman for Barclays Stockbrokers said: We offer a range of products to meet the needs of different investors.
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The story of Gianpaolo Prinzi and Fernanda Freitas pictured above began in late , when Mr Prinzi sold his three-bedroom house in Wembley. The rest was invested in shares for retirement. Mr Prinzi, who worked for the Jordanian royal family in Kensington and later as a security engineer, opened a MarketMaster account with Barclays.
This provides instant credit to buy shares. The money must be repaid within three days by card or direct debit. Mr Prinzi saw 98 direct debits returned unpaid, using credit in a series of manoeuvres to invest up to pc of the value of his holdings.
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