Not upheld: Mis-selling and mismanagement of discretionary investment complaint against Downing LLP

Decision detail

Summary

Mr and Mrs C invested £20,000 each in a Downing EIS in December 2016, expecting an exit after approximately four years. They initially complained in 2021 and accepted £13,000 compensation, but complained again in 2025 when their investments were worth only £4,000 each with no exit in sight. They alleged the promotional material was misleading by emphasising capital preservation and asset-backed investments, and that Downing had mismanaged the fund through inadequate due diligence and poor ongoing management. The ombudsman found the promotional material sufficiently disclosed high-risk nature and made clear that capital preservation and exit timelines were not guaranteed, that due diligence was adequate, and that investment decisions were made within the discretionary mandate. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found that Downing's promotional material made sufficiently clear that the EIS was a high-risk investment despite references to capital preservation and asset-backed investments. The brochure explicitly stated in bold that capital preservation was not guaranteed and EIS investments carry high risks. The exit timeline was presented as a target after approximately four years, not a guarantee. Downing conducted adequate due diligence and made investment decisions within their discretionary mandate. The materialisation of investment risks does not constitute a failure to manage in line with the mandate. No evidence was found that Downing failed to act with due skill, care or diligence.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website