Not upheld: Investment mis-selling complaint against JAMES HAY ADMINISTRATION COMPANY LIMITED

Decision detail

Summary

Mrs M complained about JHP's management of her SIPP's commercial property investment, specifically regarding the lease for two units. She alleged JHP failed to ensure rental income generation, delayed resolving the lease until 2022, agreed an unreasonably low rental rate of £22,000 instead of £26,000-£28,000, failed to backdate rent to cover arrears, and improperly allowed a mezzanine floor alteration without requiring reinstatement. The ombudsman found issues 1 and 4 were outside jurisdiction as out of time. On the merits of issues 2 and 3, the ombudsman found JHP acted reasonably: the £22,000 rent was based on a valid 2019 surveyor valuation; failing to backdate rent was reasonable given the urgent need for income and tenant's resistance; and the mezzanine alteration had been previously agreed by Mrs M's husband in 2016 terms. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found that JHP's use of the 2019 surveyor valuation (£22,000 per annum) was reasonable as it was maintained by the surveyors in 2021 and did not require review until 2024. The 2023 valuation citing £28,000 was obtained after the lease agreement and therefore unavailable to JHP at the time. Regarding backdated rent, the ombudsman found it was not unreasonable for JHP to concede on this point given the protracted negotiations, the tenant's apparent unwillingness to pay full arrears, and the urgent need for the SIPPs to receive rental income after six years of deprivation. Prolonging negotiations would not have been in the SIPPs' best interests. On the mezzanine issue, the ombudsman found that Mrs M's husband had agreed to its removal in 2016 terms, the 2022 terms mirrored this, the surveyor was satisfied with the replacement, and there was no evidence the couple wanted reinstatement after the tenancy.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website