Not upheld: failure to intervene / breach of FCA Consumer Duty complaint against Vanguard Asset Management Limited

Decision detail

Summary

Mr T, who turned 18 in 2023, inherited a Junior Stocks and Shares ISA that matured to an ISA. Between August 2023 and January 2025, he withdrew approximately £45,000 from the account to fund a gambling addiction, losing his life savings. Mr T complained to Vanguard arguing it should have detected the unusual account activity and intervened, citing his vulnerability as a young person with a gambling addiction and recent medical diagnosis. Vanguard declined the complaint, stating it was an execution-only relationship and it had complied with all policies and regulatory requirements. The Ombudsman upheld Vanguard's position, finding that the execution-only nature of the relationship limited Vanguard's obligations, Mr T had not disclosed his vulnerability or gambling addiction, and the pattern of transactions was consistent with legitimate uses without visibility to Vanguard of how funds were ultimately spent.

The Ombudsman's reasoning

The Ombudsman found that the execution-only nature of the relationship meant Vanguard's role was limited to executing instructions without obligation to monitor decisions or assess suitability. While intervention might be required in cases of clear indicators of fraud, vulnerability, or serious harm, none were present here. Mr T did not disclose his gambling addiction or vulnerability to Vanguard, and the pattern of selling investments and withdrawing to a personal bank account was consistent with legitimate reasons and did not give Vanguard visibility of how funds were spent. The messages sent by Mr T were standard customer communications expressing normal frustrations, not indicating distress or vulnerability. The Ombudsman concluded it would not be fair and reasonable to expect an execution-only platform to have systems identifying this type of activity as requiring intervention without clearer indicators of harm.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website