Not upheld: Investment mis-selling complaint against Interactive Investor Services Limited (IIS)

Decision detail

Summary

Mr B complained that IIS failed to pay him a special dividend of 50p per share on preference shares he purchased on 13 May 2025 in stock A held within an ISA. IIS initially credited the dividend but subsequently removed it, offering £50 compensation for the error. The ombudsman found that shares purchased on 13 May 2025 were ineligible for the special dividend because, under standard LSE T+2 settlement rules, they would not be registered in Mr B's name by the record date of 13 May 2025 at 6pm. The ex-dividend date of 12 May 2025 was properly set by the LSE, and the reduced contract note prices confirmed the market's recognition of this ineligibility. The ombudsman upheld IIS's position and found the £50 compensation adequate for the initial error.

The Ombudsman's reasoning

The ombudsman found that shares purchased on or after the ex-dividend date of 12 May 2025 would not be registered in the buyer's name by the record date of 6pm on 13 May 2025, due to standard LSE T+2 settlement rules. Therefore, buyers of shares on 13 May 2025 would not be 'registered holders' entitled to the special dividend. The contract notes marked 'ex-dividend' with reduced prices (£1.06-£1.07 versus prior prices of £1.52-£1.524) evidenced that the market had stripped out the 50p dividend value. The ombudsman accepted that IIS made an initial error in crediting the full dividend amount but correctly removed the overpayment, and the £50 compensation was adequate for this error.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website