Partially upheld: Unauthorized sale of shares / failure to follow customer instructions complaint against HSBC UK Bank Plc trading as first direct bank

Decision detail

Summary

Mr A held 400,000 shares in Firm S within a stocks and shares ISA with First Direct. When Firm S delisted from AIM in March 2025, First Direct notified Mr A that shares would be automatically sold unless he instructed otherwise by 1 April 2025. Mr A explicitly instructed First Direct not to sell, but the shares were sold on 2 April 2025 at 1.015p per share for £4,060. First Direct admitted the error and attempted to rebuy the shares but were unable to. In February 2026, Firm S announced it was winding down due to financial difficulties. The ombudsman upheld the complaint in principle but found no financial loss compensation was warranted, as Mr A was likely in a better financial position having received £4,060 rather than retaining shares in a company that subsequently failed. £700 compensation was awarded for distress and inconvenience.

The Ombudsman's reasoning

The ombudsman accepted that First Direct made an error in selling the shares against Mr A's explicit instruction. However, the key issue was determining fair compensation. The ombudsman concluded that Mr A is likely in a better financial position now than he would have been had he retained the shares, given that Firm S subsequently announced it was winding down due to inability to finance operations and raise funds. Therefore, no financial loss compensation was warranted. However, compensation for distress and inconvenience was appropriate given the emotional attachment Mr A had to the shares, his reliance on the funds, and the protracted communications with First Direct attempting to rectify the error.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website