Not upheld: unsuitable investment advice; inadequate tax advice disclosure complaint against Ascot Lloyd Limited

Decision detail

Summary

Ms R complained that Ascot Lloyd gave unsuitable advice when recommending she invest £310,000 of a £450,000 gift in an onshore bond in September 2019. She argued the bond was unsuitable because she was a higher rate taxpayer facing 40% tax on gains, could have used her CGT allowance on other products, and the bond did not generate true income but merely returned her original capital. She incurred approximately £25,000 in tax when she encashed the bond in January 2025. The ombudsman found the advice was suitable because it aligned with her objectives of income and capital growth, was consistent with her 'low medium' risk profile, provided tax-efficient investment through the 5% withdrawal allowance, and Ascot Lloyd provided clear information about the tax position. The ombudsman did not uphold the complaint.

The Ombudsman's reasoning

The ombudsman found that the advice was suitable because: (1) the bond aligned with Ms R's objectives of income and capital growth over the medium term; (2) the discretionary managed portfolio was appropriate for her 'low medium' risk profile and her stated desire for an active investment strategy; (3) Ms R had capacity to take risk given her retained emergency funds and expected future income; (4) the bond provided tax-efficient income through the 5% withdrawal allowance; (5) Ascot Lloyd provided clear information about the tax position and charges; and (6) the ombudsman could not hold Ascot Lloyd responsible for Ms R's 2025 decision to encash the bond or the resulting tax liability. The ombudsman rejected the argument that the adviser should have explained higher rate tax implications, noting that the planning report referenced Ms R becoming a basic rate taxpayer in retirement, suggesting this was discussed.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website