Upheld: unsuitable investment advice; failure to consider alternatives; inadequate documentation; lack of detailed suitability assessment complaint against Stephen Devey trading as Abraxas Financial Consultants
Financial Ombudsman decision DRN-6345819 of 2026-06-02T00:00:00+00:00. unsuitable investment advice; failure to consider alternatives; inadequate documentation; lack of detailed suitability assessment complaint against Stephen Devey trading as Abraxas Financial Consultants. Outcome: Upheld.
Decision detail
| Reference | DRN-6345819 |
|---|---|
| Decision date | 2026-06-02T00:00:00+00:00 |
| Firm | Stephen Devey trading as Abraxas Financial Consultants |
| Product | investment bond (offshore) |
| Claim type | unsuitable investment advice; failure to consider alternatives; inadequate documentation; lack of detailed suitability assessment |
| Outcome | Upheld |
| Remedy | Abraxas must: (1) calculate the notional value of a GIA/ISA strategy and compare it with the actual bond value, paying any difference to Mr and Mrs W; (2) compare tax paid under the bond versus a GIA/ISA strategy and pay any difference with 8% simple interest from date of payment; (3) account for additional tax liability on bond surrender compared to GIA/ISA surrender; (4) assume all charges would be the same in both scenarios except: add VAT to fund managers' charges if evidenced that bond charges were VAT-free, and remove the 0.23% platform charge; (5) alternatively, accept Mr and Mrs W's simplified redress proposal if both parties agree; (6) pay compensation within 28 days plus 8% simple interest if delayed. |
Summary
Mr and Mrs W complained that Abraxas provided unsuitable advice in 2010-2011 by recommending an offshore investment bond without properly considering alternative tax-efficient vehicles. They invested £500,000 in January 2010 and a further £260,000 in October 2011, paying fees of 1.5-2% initially plus 0.5% ongoing. The ombudsman found that while the discretionary managed investment strategy was appropriate, the choice of offshore bond as the tax wrapper was unsuitable for basic rate taxpayers and that Abraxas failed to document consideration of GIA/ISA alternatives. The complaint was upheld and Abraxas was directed to compensate Mr and Mrs W by comparing the actual bond value with a notional GIA/ISA value, accounting for tax differences and adjusting for charges and VAT implications.
The Ombudsman's reasoning
The ombudsman found that while the investment strategy itself (discretionary managed portfolio) was suitable and performed well, Abraxas failed to properly consider and document alternative tax wrappers. As basic rate taxpayers, Mr and Mrs W would not significantly benefit from the offshore bond's gross roll-up advantage, and a GIA/ISA combination would likely have been more tax-efficient given their circumstances and the likelihood of withdrawals exceeding 5%. The lack of contemporaneous documentation, absence of a detailed fact find, and failure to explain why alternatives were rejected meant Mr and Mrs W could not make an informed decision. The ombudsman rejected arguments that GIAs were uncommon at the time or that administrative burden justified the recommendation, particularly given Mr and Mrs W had an accountant.
How this compares
| Group | Decisions | Uphold rate |
|---|---|---|
| Stephen Devey trading as Abraxas Financial Consultants, all decisions | 1 | 100% |
Source
Read the original decision on the Financial Ombudsman Service website