Not upheld: Investment mis-selling complaint against HSBC UK Bank Plc (trading as HSBC Private Banking)

Decision detail

Summary

Mr and Mrs G complained to the FOS about HSBC's advice and service regarding their UK Gilt investments. Their three main complaints were: (1) HSBC reinvested their tax-free capital gains from a maturing Gilt without explicit consent or clear disclosure; (2) HSBC recommended 43% allocation to long-dated Gilts (2033 and 2035) despite their stated preference for short-term investments; and (3) HSBC failed to monitor proactively despite charging advisory fees including a 0.25% custody fee. The ombudsman rejected all three complaints, finding that Mr G gave explicit verbal consent to the reinvestment during a telephone call and should have understood the maturity value included gains, that the long-dated Gilt allocation was consistent with their recorded investment objectives and time horizon, and that HSBC provided appropriate advisory service with regular contact and advice as contracted. The ombudsman concluded that HSBC's fees were justified and disclosed in accordance with the contractual agreement.

The Ombudsman's reasoning

The ombudsman found that HSBC's combination of the capital and gains in its communications was not unclear or misleading, as Mr G should reasonably have understood that the difference between his £4,000,000 investment and the £4,138,000 maturity value represented gains. The ombudsman noted that Mr G gave explicit verbal consent during the 22 March 2024 call and was aware of alternative options (investing £5,000,000 instead). Regarding the 43% allocation to long-dated Gilts, the ombudsman found this was consistent with Mr and Mrs G's recorded investment objectives (over 10 years time horizon, comfort with illiquid investments) and HSBC's clear explanation that longer-dated Gilts were intended as a trading opportunity to be sold if interest rates fell. The ombudsman rejected the claim that HSBC failed to monitor proactively, finding evidence of regular contact and advice, and noting that HSBC's view that the Gilts would increase in value over the medium to longer term was reasonable. The ombudsman concluded that HSBC was not obliged to provide daily monitoring or recommend immediate sales when the Gilts broke even, as this was not part of the contracted service.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website