Investors with money in a troubled bond fund run by AIG last night launched an action group to meet with the insurer and try to recover their cash after being advised by lawyers that they may have a case for mis-selling against the private banks and financial advisers who sold them the product. The move comes despite AIG offering policyholders options that would allow them to redeem part of their investments in December.

The group, whose members invested in the AIG Life enhanced bond fund, has elected representatives to meet with Doug Brown, chief executive of US insurer's UK unit, and the heads of the independent financial advisers concerned. Simon Galbraith, a policyholder involved in co-ordinating the group, said it was important depositors' views were taken into account.