Not upheld: Investment mis-selling complaint against J M Finn & Co Ltd

Decision detail

Summary

Mr and Mrs O invested £6m from their business sale with Finn for discretionary portfolio management, agreeing to a medium risk remit. The portfolio lost approximately £1m by September 2022 and approximately 20% overall starting November 2021. Mr and Mrs O complained that the portfolio was unsuitable, being approximately 90% equities rather than truly medium risk, that Finn invested too quickly, and that ongoing management was poor. The ombudsman found that the portfolio composition aligned with Finn's definition of medium risk as set out in the application forms and example portfolio, that Mr and Mrs O had prior investment experience and had declined to request higher allocations to low-risk investments, and that poor investment performance does not itself indicate negligence. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found that the portfolio composition was consistent with Finn's definition of medium risk as set out in the application forms and example portfolio provided. Medium risk was defined as portfolios mainly comprising shares from FTSE 350 companies or similar overseas entities, with up to 15% in higher risk assets. The portfolio held approximately 37% FTSE 100/large FTSE 250 shares, 16% US large companies, 6% European large companies, and approximately 9-10% in higher risk holdings, which fell within the contemplated remit. The ombudsman noted that Mr and Mrs O had prior investment experience, had been informed that the portfolio could be worth considerably less at any point, had declined to specify a minimum allocation to low-risk investments, and had expressed comfort with volatility. The fact that the portfolio performed poorly and fell in value does not itself indicate negligence. The ombudsman rejected the argument that the portfolio was mis-sold as high risk, finding instead that it aligned with what was proposed and agreed.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website