Not upheld: failure to advise on investment risks / breach of ongoing advice duty complaint against Westminster Wealth Management LLP

Decision detail

Summary

Mrs E complained that Westminster Wealth Management failed to advise her about the high-risk nature of a property fund investment made via a mezzanine loan, resulting in substantial losses. The ombudsman first determined that Mrs E was an eligible complainant despite not having a formal client agreement with WWM, as she was obtaining ongoing investment advice services through her husband. However, on the merits, the ombudsman found that WWM's ongoing advice duty was limited to Mrs E's investment ISA and did not extend to the mezzanine loan investment, which was a commercial arrangement outside the scope of regulated advice. Since WWM took no fees for advising on the Fund investment and there was no evidence Mrs E requested such advice, the ombudsman concluded WWM had no obligation to highlight the investment's risks and therefore did not uphold the complaint.

The Ombudsman's reasoning

The ombudsman found that while Mrs E was a customer of WWM obtaining ongoing investment advice services, the scope of that advice was limited to her investment ISA and was provided through her husband. WWM had no formal agreement with Mrs E setting out the scope of services. The mezzanine loan investment was a commercial arrangement outside the scope of regulated advice that WWM could provide. Since WWM took no fees for advising on the Fund investment and there was no evidence Mrs E asked for advice on it, WWM was under no obligation to highlight its risks. The ombudsman also noted that even if WWM should have highlighted the risks, it was unclear what remedial action Mrs E could have taken given the nature of the commercial loan arrangement.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website