Not upheld: Fraud reimbursement (APP scams) complaint against Hargreaves Lansdown Asset Management Limited

Decision detail

Summary

Mr A complained that Hargreaves Lansdown Asset Management Limited failed to protect him from losses totalling approximately £38,992 when he invested in J shares between March and April 2025, which he believed were subject to a pump and dump market manipulation scheme. Mr A alleged HL should have identified warning signs, intervened based on his trading activity, recognised his vulnerabilities, and complied with the Consumer Duty. HL rejected the complaint, stating it provided an execution-only service, had not recommended J, and had no knowledge of the circumstances influencing Mr A's investment decision. The ombudsman did not uphold the complaint, finding HL genuinely provided an execution-only service, had no reasonable basis to identify market manipulation before the share price collapse, and met its Consumer Duty obligations through provision of investment scam warnings.

The Ombudsman's reasoning

The ombudsman found that HL provided a genuine execution-only service where Mr A independently decided to purchase J shares and submitted dealing instructions himself. HL did not recommend the investment, encourage Mr A to invest, or assume responsibility for assessing suitability. While J was listed on an established exchange with regulatory oversight and there were no prior trading suspensions or regulatory warnings, the ombudsman was not persuaded HL ought reasonably to have identified market manipulation signs before the collapse. The unusual price increase alone, without more, did not mean HL should have concluded manipulation was occurring. Regarding the Consumer Duty, the ombudsman accepted it was relevant but found it does not impose an obligation on execution-only platforms to protect customers from every investment loss or third-party misconduct. HL's provision of investment scam warnings through its security centre met reasonable expectations. The trading pattern of four purchases over several days, while significant, was not so unusual as to trigger intervention obligations, and HL had no information indicating Mr A was acting on unauthorised third-party instructions. Although Mr A's personal circumstances were sympathetic, HL was unaware of them at the time of trading, so their disclosure would not have required intervention.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website