Not upheld: Investment mis-selling complaint against James Brearley & Sons Limited

Decision detail

Summary

Mr C complained about fees charged by JB&S for holding an illiquid loan note/bond investment that became worthless. The investment was transferred to JB&S in February 2021 following the liquidation of the previous custodian broker, with Mr C accepting JB&S's standard terms including a £20 monthly minimum charge. The underlying issuer went into administration in August 2021, but JB&S did not reduce fees until September 2022, when it changed the structure to a £5 monthly charge deferred until redemption or receipt of funds. The ombudsman found that JB&S was entitled to charge the original fees as Mr C had accepted the terms, and that the firm's August 2022 fee adjustment was reasonable and fair given the uncertainty about the bond's value and the timing of information received about the issuer's difficulties. The complaint was not upheld, and no remedy was ordered.

The Ombudsman's reasoning

The ombudsman found that Mr C accepted JB&S's terms and conditions when he did not opt out of the transfer following the previous broker's liquidation. The £20 monthly charge was justified as it covered administrative costs and provided access to dealing services. While the ombudsman acknowledged that other brokers took different approaches by ceasing charges sooner, this did not compel JB&S to do the same. The ombudsman found that JB&S took reasonable precautionary steps in August 2022 by reducing and deferring fees, particularly given the uncertainty about the bond's value at that time. The ombudsman noted that JB&S was not put on notice of the bond's underperformance until the LSE notices in March-June 2022, and that administration of the underlying issuer did not necessarily equate to nil value. The ombudsman rejected the argument that JB&S was taking advantage of Mr C or profiteering, finding no evidence of JB&S's involvement in the original mis-sale.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website