Not upheld: Investment mis-selling complaint against AJ Bell Securities Limited

Decision detail

Summary

The estate of Mr W complained that AJ Bell Securities made an error on an indemnity document required to sell shares to pay inheritance tax, causing a delay that resulted in a £15,000 loss when the share price fell over a weekend. AJ Bell acknowledged the error and attempted to rectify it within hours on 24 July 2024, offering an alternative signatory solution on 25 July. However, the corrected indemnity was not returned to AJ Bell until 29 July 2024, after the share price had fallen. The ombudsman found that while AJ Bell's initial error was unfortunate, it took prompt action to mitigate the impact, and the estate had reasonable opportunities to return the corrected document sooner. Applying the principle that injured parties must take reasonable steps to mitigate loss, the ombudsman found the estate's failure to use the alternative signatory option or email the signed document on 26 July broke the chain of causation between AJ Bell's error and the resulting loss. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found that while AJ Bell made an initial error, it acted promptly to identify and rectify the mistake within hours on 24 July 2024. The key issue was whether the estate had a reasonable opportunity to mitigate loss. AJ Bell offered an alternative signatory solution on 25 July 2024, which the estate did not take up. The executor on holiday signed the corrected indemnity on 26 July 2024 but it was not emailed to AJ Bell until 29 July 2024, despite the executor's clear awareness of the IHT deadline. The ombudsman applied the principle that an injured party must take reasonable steps to mitigate further loss. Had the estate either arranged an alternative signatory on 25 July or emailed the signed document on 26 July, the sale would likely have completed before the weekend share price movement. Therefore, the loss was not caused by AJ Bell's error but by the estate's failure to take reasonable mitigating steps.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website