Partially upheld: Investment mis-selling complaint against Redmayne-Bentley LLP

Decision detail

Summary

Mr and Mrs S held discretionary investment portfolios with RB. Following pandemic concerns in March 2020, they instructed RB to liquidate to cash. RB proposed reinvestment in July 2020, but Mr and Mrs S remained reluctant to reinvest for months while RB continued charging 1% management fees. The ombudsman found RB not responsible for the initial liquidation decision but upheld the complaint regarding fees charged from November 2020 onwards, finding RB should have proactively ended the discretionary arrangement when it became clear the service was no longer in the clients' best interests and their capital was being eroded by fees. RB was ordered to refund fees from 1 November 2020 and pay £250 compensation for distress caused.

The Ombudsman's reasoning

The ombudsman found that while RB was not responsible for the initial decision to liquidate in March 2020 (which was Mr and Mrs S's own instruction made after being advised to hold steady), RB breached its regulatory obligations under FCA Principles and COBS 2.1 by continuing to charge discretionary management fees from November 2020 onwards when it was evident the arrangement was no longer in the clients' best interests. RB should have proactively recognized that Mr and Mrs S were uncomfortable with discretionary management, explained their options (including transferring to a cash ISA to retain tax-exempt status), and ended the arrangement rather than allowing capital to be eroded by fees for a service that could not be provided due to the clients' clear instructions not to reinvest. The ombudsman rejected the argument that RB was contractually obliged to reinvest without regard to the clients' changed circumstances and attitude to risk.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website