Partially upheld: Investment mis-selling complaint against J M Finn & Co Ltd
Financial Ombudsman decision DRN-5520179 of 2025-04-30T00:00:00+00:00. Investment mis-selling complaint against J M Finn & Co Ltd. Outcome: Partially upheld.
Decision detail
| Reference | DRN-5520179 |
|---|---|
| Decision date | 2025-04-30T00:00:00+00:00 |
| Firm | J M Finn & Co Ltd |
| Product | Investment |
| Claim type | Investment mis-selling |
| Outcome | Partially upheld |
| Remedy | JM Finn should: (1) For the period March to September 2020 (already done): exclude cash from management fees; (2) For periods before March 2020 and after September 2020: compare the performance of Mr G's cash holdings to the Average rate from fixed rate bonds benchmark to the date Mr G moved his portfolio, and pay the difference between fair value and actual value if actual value is less than fair value; (3) Pay 8% simple interest per year on any loss from the date the portfolio was transferred to the date of settlement; (4) Pay Mr G £200 for distress and inconvenience caused. |
Summary
Mr G complained about JM Finn's management of his discretionary SIPP portfolio between 2017 and 2022, alleging poor decision-making, unsuitable management, and inadequate suitability reviews. The ombudsman found that while JM Finn conducted required annual suitability reviews and maintained updated client information, it held an unsuitable level of cash (10-20% of portfolio value) that generated negative real returns for Mr G after accounting for 1.5% management fees and 0.875-1.125% margin charges. This created a conflict of interest whereby JM Finn was remunerated twice on the same asset. The ombudsman rejected Mr G's other complaints about portfolio suitability, bespoke management, and market re-entry timing, finding these were appropriately handled. The ombudsman ordered JM Finn to compare the cash holdings to fixed rate bond benchmarks and pay compensation for any shortfall, plus 8% simple interest and £200 for distress and inconvenience.
The Ombudsman's reasoning
The ombudsman found that while JM Finn carried out required annual suitability reviews and maintained updated client information, it failed to manage the cash component of the portfolio in a manner suitable for Mr G's medium risk profile. The key issue was that JM Finn held between 10-20% of the portfolio in cash, which generated negative real returns for Mr G after accounting for the 1.5% management fee and 0.875-1.125% margin charges (creating a 2.375-2.625% hurdle rate). This constituted a conflict of interest whereby JM Finn was remunerated twice on the same asset while Mr G's wealth declined. Although JM Finn treated cash as a low-risk asset class, the ombudsman concluded this was unsuitable given the minimal interest rates available and the impact on overall portfolio performance. The ombudsman rejected Mr G's arguments about falsified records, dishonest management, and the need for punitive damages, noting that the FOS role is to reach fair outcomes for individual complaints, not to punish firms. The ombudsman also found that Mr G was appropriately involved in the March 2020 liquidation and April 2020 reinvestment decisions, contrary to his complaint.
How this compares
| Group | Decisions | Uphold rate |
|---|---|---|
| J M Finn & Co Ltd, all decisions | 13 | 19% |
| Investment mis-selling, all decisions | 14,206 | 37% |
| Investment, all decisions | 14,114 | 34% |
Source
Read the original decision on the Financial Ombudsman Service website