Upheld: Unsuitable investment advice / Mis-selling - risk profile mismatch complaint against King's Court Financial Planning LLP
Financial Ombudsman decision DRN-6118484 of 2026-05-08T00:00:00+00:00. Unsuitable investment advice / Mis-selling - risk profile mismatch complaint against King's Court Financial Planning LLP. Outcome: Upheld.
Decision detail
| Reference | DRN-6118484 |
|---|---|
| Decision date | 2026-05-08T00:00:00+00:00 |
| Firm | King's Court Financial Planning LLP |
| Product | Investment - AIM ISA (Alternative Investment Market Stocks & Shares Individual Savings Account) |
| Claim type | Unsuitable investment advice / Mis-selling - risk profile mismatch |
| Outcome | Upheld |
| Remedy | KCFP must: (1) Calculate fair compensation by comparing the AIM ISA's actual performance against a benchmark comprising 50% FTSE UK Private Investors Income Total Return Index and 50% average fixed-rate bond rates, from the date of investment to the date it ceased to be held (November 2024), and pay the difference if the fair value exceeds actual value; (2) Pay 8% simple interest per annum on any loss from the end date to settlement; (3) Pay £125 for trouble and inconvenience; (4) Provide calculation details in clear and simple format. The compensation limit applicable is £445,000 (complaint event after 1 April 2019, referred to FOS after 1 April 2025 but before 1 April 2026). |
Summary
Mrs R and her husband, both retired, received joint investment advice from KCFP in 2021 to invest approximately £190,500 in an AIM ISA and £170,000 in a GIA/FEI portfolio. Mrs R had self-assessed as having a conservative risk profile, but KCFP assessed them as balanced and recommended the adventurous AIM ISA primarily for IHT mitigation benefits—an objective KCFP suggested rather than Mrs R presenting. The AIM ISA was implemented in early 2022 but the GIA was never funded and was closed in December 2022. Mrs R liquidated the AIM ISA in November 2024 after experiencing losses, stating she could not tolerate the stress and volatility. The Ombudsman upheld the complaint, finding the AIM ISA unsuitable because it significantly mismatched Mrs R's risk profile (adventurous vs. conservative/balanced) without her informed consent, and the IHT mitigation objective did not justify exposing her to risks two to three levels above her tolerance. KCFP must calculate and pay fair compensation based on a 50/50 benchmark of equity index and fixed-rate bonds, plus 8% interest and £125 for distress.
The Ombudsman's reasoning
The Ombudsman found that KCFP's recommendation of the AIM ISA was unsuitable because it created a significant mismatch between Mrs R's risk profile and the investment's risk level. Although KCFP assessed a balanced risk profile for joint advice purposes, Mrs R had self-assessed as conservative, and KCFP concedes the AIM ISA was adventurous—placing it two to three levels above her risk tolerance. The Ombudsman rejected KCFP's argument that the AIM ISA was part of a balanced two-part solution with the GIA, finding that the GIA was not essential (it was never funded and KCFP treated it as optional). The primary justification for the AIM ISA—IHT mitigation—was an objective initiated by KCFP, not Mrs R, and was not her priority. Critically, Mrs R was not made aware of the significant risk profile mismatch at the point of advice; she reasonably relied on KCFP's representation that the recommendation was suitable. The Ombudsman concluded that KCFP took it upon itself to determine whether the IHT mitigation objective justified exposing Mrs R to significantly higher risks than she was prepared to undertake, without her informed decision to accept this cost. The 10-year investment term did not cure the fundamental unsuitability of recommending an adventurous investment to someone with a conservative/balanced risk profile.
How this compares
| Group | Decisions | Uphold rate |
|---|---|---|
| King's Court Financial Planning LLP, all decisions | 2 | 100% |
Source
Read the original decision on the Financial Ombudsman Service website