Not upheld: fund suspension and withdrawal restrictions complaint against St. James's Place Wealth Management Plc

Decision detail

Summary

Mr M complained that SJP unfairly suspended the property fund on 30 October 2023, preventing him from transferring his £7,000 investment to a new provider and causing him to lose growth while continuing to pay management charges. SJP suspended withdrawals to protect investors from forced property sales below market value due to excessive outflows. The ombudsman found that the suspension was permitted under the terms and conditions, that Mr M had been provided with risk documentation in 2017 explaining property risks, and that the suspension was a fair action to protect all investors' interests. The ombudsman noted that the fund had been previously suspended in 2020 without prompting Mr M to act, and that COVID-19 was an extraordinary event affecting many property funds across the industry. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found that fund suspensions, while rare, are a recognized risk of investing in property funds and are covered in the terms and conditions. The terms and conditions explicitly allowed SJP to delay transactions for up to six months and to set aside terms in exceptional circumstances. SJP provided Mr M with risk documentation in 2017 that explained property risk factors. The suspension was necessary to protect all investors from the harm of forced property sales below market value. COVID-19 was an extraordinary, unforeseeable event that affected many property funds across the industry, and the regulator indicated suspensions were in investors' best interests. Mr M's previous failure to act when the fund was suspended in 2020 suggests he would not have acted differently with better information. SJP acted fairly in winding down the fund and transferring released capital to Mr M's new provider.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website