Not upheld: failure to provide ongoing advice and management; failure to communicate regarding fund closure complaint against AFH Independent Financial Services Limited trading as AFH Wealth Management

Decision detail

Summary

The trustees of the S Trust invested £45,000 in an onshore investment bond in July 2012 through Firm S, which later merged with AFH. The trustees complained that AFH failed to manage the investment or provide ongoing advice despite receiving ongoing payments, and did not contact them about the closure of the underlying fund in 2020. The ombudsman found that the bond was remunerated through initial and trail commission only, with no separate agreement for ongoing services, and that the trustees received annual statements showing performance. The ombudsman concluded that AFH was not obliged to provide ongoing management or proactively contact the trustees, and that responsibility for notifying about the fund closure lay with MetLife. AFH was ordered to pay £150 compensation for failing to promptly address the trustees' initial enquiry in October 2024.

The Ombudsman's reasoning

The ombudsman found that the trustees were not paying an ongoing advice charge to Firm S or AFH, as the remuneration was structured as initial commission (4%) and trail commission (0.5%), which covered the cost of initial advice only. The trail commission was not intended to fund ongoing services, and no separate agreement for ongoing management was established. The ombudsman noted that if an ongoing service had been expected, there would have been a separate agreement setting out the service and fee. The trustees received annual statements showing bond performance and had the opportunity to contact AFH if they were unhappy with performance. The ombudsman was not persuaded that AFH had a duty to proactively contact the trustees about the fund closure in 2020, as this was MetLife's responsibility as the bond provider. The ombudsman found it reasonable that the trustees would have contacted AFH sooner if they had genuinely expected ongoing services, particularly after Miss S updated her address in March 2015.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website