Not upheld: Investment mis-selling complaint against Downing LLP

Decision detail

Summary

Mr C invested £52,500 in a Downing EIS Indian solar project in October 2015, expecting a four-year investment with 17.4% annual returns. The investment was not exited until 2024 (nine years later) when the solar plant was sold, resulting in Mr C receiving £24,249, a loss of over 50% of his capital. Mr C complained that Downing failed to update him on performance, did not offer exit options after four years, and did not explain the extended timeframe. The ombudsman found that the Memorandum and brochure adequately disclosed the high-risk nature, uncertain returns, and non-guaranteed four-year exit, and that Downing provided required six-monthly statements. The complaint was not upheld as the investment's underperformance was a realisation of disclosed risks rather than a failure by Downing.

The Ombudsman's reasoning

The ombudsman determined that Downing was not responsible for advising Mr C on suitability, as that was the role of his financial adviser. The key assessment focused on whether Downing provided clear, fair, and not misleading information, and whether they managed the investment in line with their mandate. The ombudsman found that the Memorandum and brochure adequately highlighted the high-risk nature of the investment, clearly distinguished between target returns and inherent risks, and made sufficiently clear that exit after four years was not guaranteed. The ombudsman was satisfied that Downing sent required six-monthly statements and that the delay in exit was due to lack of liquidity rather than mismanagement. The ombudsman concluded that while the investment underperformed, this was a realisation of the risks disclosed, not a failure by Downing.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website