Not upheld: Suitability of investment advice / Failure to advise on overseas tax implications complaint against Timothy James and Partners Ltd (TJP)

Decision detail

Summary

Mr G, a dual UK/US national, complained that TJP gave unsuitable advice in 2013 when opening a JISA on his behalf, which resulted in US tax liability when he sold shares in 2023-2024. Mr G argued that TJP should have been aware of his US citizenship and recommended alternative investments. TJP responded that it was a UK-regulated adviser that did not present itself as a foreign tax adviser, and that it was unaware of Mr G's US citizenship until 2016. The ombudsman upheld TJP's position, finding that the responsibility for understanding US tax implications rested with the investor/guardian, not the UK financial adviser, and that TJP took proportionate steps once it became aware of the citizenship issue by recommending specialist US tax advice.

The Ombudsman's reasoning

The ombudsman found that TJP was a UK-regulated adviser whose primary role was investment advice for UK residents. While the advice included consideration of UK tax efficiency through the ISA wrapper, this was incidental to the investment recommendation itself. The ombudsman concluded that responsibility for understanding the implications of US citizenship and worldwide tax liability rested with the investor or guardian who had knowledge of that status. Even if TJP's adviser was aware of Mr G's US birth, this would not have obligated him as a UK financial adviser to understand US tax law (PFIC/FATCA). Once TJP became aware of the citizenship issue in 2016, it took proportionate steps by recommending specialist US tax advice. The ombudsman was not persuaded TJP should have realised sooner the impact on Mr G's US tax position.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website