Not upheld: Alleged unauthorized transfers and failure to safeguard account access complaint against Interactive Investor Services Limited (IISL)

Decision detail

Summary

The estate of Mrs W complained that her son S2 conducted unauthorized transfers of her ISA without her knowledge or consent: the November 2021 transfer from CS to IISL, the December 2021 purchase of Vanguard fund shares, and the April 2023 transfer of those shares to S2's ISA. The estate alleged IISL failed to safeguard the account and should have blocked these transactions. IISL disputed the allegations, arguing all transactions were conducted by Mrs W using proper security procedures and that it had no indication of wrongdoing until August 2023. The ombudsman found that IISL did nothing wrong because: (1) the November 2021 transfer appeared to be initiated by Mrs W; (2) the December 2021 share purchase occurred within the ISA with no indication of compromise; (3) Mrs W and S1 had multiple opportunities to disclose their concerns but did not do so until August 2023; (4) the April 2023 transfer was conducted online using Mrs W's credentials and appeared legitimate; and (5) IISL had no knowledge of the family dispute or allegations against S2 prior to August 2023. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found that IISL had no reasonable grounds to suspect wrongdoing or restrict access to the ISA prior to August 2023. Regarding the November 2021 transfer, IISL processed it as an electronic transfer from Mrs W and had no indication of anything untoward. Although S2 had authority over the CS ISA, the evidence showed the transfer was initiated by Mrs W from IISL's perspective. The December 2021 Vanguard share purchase occurred within the ISA with no indication of compromise. The 22 December 2022 call, while showing Mrs W struggled with security checks and received assistance from S1, did not raise any red flags as account holders commonly fail security checks due to lack of information. S1 and Mrs W had multiple opportunities to disclose their allegations (the December 2022 call, the February 2023 letters) but chose not to. The 20 March 2023 call with S2 offering to pass security checks, while potentially suggestive, was not sufficiently concerning given S2's status as a security contact and the context of Mrs W receiving family assistance. The April 2023 Vanguard transfer was conducted online using Mrs W's credentials and appeared as a legitimate inter-ISA transfer. IISL could not have known about the family dispute or allegations against S2 until August 2023. The ombudsman rejected the estate's arguments about missing forms, email address discrepancies, and the need to mirror CS's third-party authority restrictions, finding none of these established wrongdoing by IISL.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website