Not upheld: Investment mis-selling complaint against Mattioli Woods Limited

Decision detail

Summary

Mr C transferred his pension into a SIPP with Mattioli Woods and invested approximately £74,000 in unquoted shares in Fund V, a property development fund, in March 2014. The investment was introduced through Business V, led by retired financial advisers, and Mr C signed multiple documents confirming his high net-worth status and understanding of risks. Mattioli Woods provided the SIPP on an execution-only basis and urged Mr C to seek independent financial advice. The investment was valued at nil in January 2020 after the fund failed to sell properties due to market conditions (Stamp Duty changes, Brexit, COVID-19). Mr C complained in June 2020 that Mattioli Woods failed to conduct adequate due diligence on the investment and should not have accepted it. The ombudsman found that while Mattioli Woods could have conducted more extensive checks, there was no evidence that such checks would have revealed information justifying refusal of the legitimate investment, which ultimately failed due to external market factors rather than fraud or mismanagement.

The Ombudsman's reasoning

The ombudsman acknowledged that Mattioli Woods could have carried out more extensive due diligence checks on Business V and Fund V in accordance with regulatory obligations under the Principles for Businesses and COBS rules. However, the key question was whether such checks would have revealed information that should have led to refusal of the investment. The ombudsman found that: (1) Mattioli Woods did conduct some due diligence, including attending investor meetings and ensuring HMRC compliance; (2) the investment was legitimate and not fraudulent; (3) there was no public domain information suggesting the investment was impaired at the time; (4) the investment ultimately failed due to external market factors (Stamp Duty changes, Brexit, COVID-19 pandemic) affecting the London property market, not due to fraud or mismanagement; (5) Mr C was clearly informed he should seek independent financial advice and confirmed his high net-worth status; and (6) Mattioli Woods was not responsible for assessing suitability as it provided an execution-only service. Therefore, even with better due diligence, nothing discoverable would have justified refusing the investment.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website