Not upheld: Account closure without notice complaint against Hargreaves Lansdown Asset Management Limited

Decision detail

Summary

B, a limited company, complained that Hargreaves Lansdown Asset Management Limited made unreasonable due diligence information requests, imposed an account restriction without adequate notice, and refused to permit account transfer. HL requested identification information for shareholders as part of a routine due diligence updating exercise, providing multiple warnings from 4 June onwards that failure to comply could result in account restriction. B submitted partial information but objected to further verification requests on 28 July. HL restricted the account on 17 September, and B requested transfer on 22 September after the restriction was in place. The ombudsman found the requests reasonable, the notice adequate and repeated multiple times, and that B had ample opportunity to transfer before restriction was imposed but failed to do so.

The Ombudsman's reasoning

The ombudsman found that HL's requests for shareholder identification and verification were reasonable within the context of due diligence obligations. Prior notice of potential account restriction was clearly given on multiple occasions (4, 17, 18, and 30 June), with explicit warnings that restrictions would prevent withdrawals and transfers. B had approximately two and a half months between 14 July (when D first objected) and 17 September (when restriction was imposed) to apply for a transfer while the account remained unrestricted. The ombudsman rejected the argument that B lacked warning, noting that B had multiple opportunities to initiate a transfer before the restriction took effect. The account restriction serves a legitimate regulatory safeguarding purpose and allowing a transfer would defeat the object of the restriction.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website