Upheld: failure to implement financial advice; tax mitigation planning failure complaint against PFM Associates Limited
Financial Ombudsman decision DRN-6383534 of 2026-06-05T00:00:00+00:00. failure to implement financial advice; tax mitigation planning failure complaint against PFM Associates Limited. Outcome: Upheld.
Decision detail
| Reference | DRN-6383534 |
|---|---|
| Decision date | 2026-06-05T00:00:00+00:00 |
| Firm | PFM Associates Limited |
| Product | Investment |
| Claim type | failure to implement financial advice; tax mitigation planning failure |
| Outcome | Upheld |
| Remedy | PFM must: (1) enter into an undertaking to reimburse Mrs B's estate for any inheritance tax, capital gains tax, or other tax paid above what would have been due had trusts been created in 2011; (2) reimburse reasonable professional costs to determine the tax liability; (3) deduct PFM's reasonable 2011 costs for enacting the trusts if separately charged; (4) pay £500 compensation for inconvenience and worry. |
Summary
Mrs B received advice from PFM in 2007 to invest in two bonds as irrevocable gifts into trust for her grandchildren, with the trusts to be formally created around 2011. PFM never created these trusts and Mrs B only discovered the failure in 2024. PFM argued an 'implied trust' had been formed and offered £250 compensation, but the ombudsman found no evidence of formal trust creation and rejected the implied trust argument as too uncertain and unlikely to be accepted by HMRC. The ombudsman upheld the complaint, finding PFM failed in its duty to revisit and implement the trusts as advised, and directed PFM to undertake to reimburse Mrs B's estate for any excess tax liability plus £500 compensation.
The Ombudsman's reasoning
The ombudsman found no evidence that formal trusts were created and rejected PFM's 'implied trust' argument as too uncertain and unlikely to be accepted by HMRC. Implied trusts typically arise when a created trust fails, not when no steps were taken to create a trust in the first place. PFM had a duty to revisit and implement the trust arrangement around 2011 as part of its ongoing advice relationship. Mrs B could not reasonably have known the trusts were not in place until 2024, and at her advanced age could not effectively mitigate the position. PFM bears sole responsibility for the tax detriment.
How this compares
| Group | Decisions | Uphold rate |
|---|---|---|
| PFM Associates Limited, all decisions | 3 | 67% |
| Investment, all decisions | 13,970 | 35% |
Source
Read the original decision on the Financial Ombudsman Service website