Not upheld: Irresponsible lending complaint against Hargreaves Lansdown Asset Management Limited

Decision detail

Summary

Mr W complained that HL failed to identify and protect him from detrimental trading patterns indicative of gambling addiction, resulting in over £1 million in losses across three accounts. Mr W argued HL should have intervened much earlier, particularly post-2021 in line with FCA vulnerable customer guidance, rather than waiting until June 2024 when little remained in the accounts. HL maintained it was an execution-only platform with no advisory obligations and that Mr W had declared investment knowledge and experience. The ombudsman found HL should have proactively identified obviously detrimental trading characteristics (extreme volume, substantial losses, high charges) from June 2018 onwards and flagged these to Mr W, but found no evidence that earlier intervention would have prevented Mr W's continued trading, as he continued trading heavily after warnings and subsequently opened accounts with other providers. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found that while HL had regulatory obligations under FCA Principles 2 and 6 to conduct business with due skill, care and diligence and treat customers fairly, these obligations must be viewed in context of the execution-only service provided. HL's Terms and Conditions clearly stated Mr W was responsible for his own investment decisions with no safeguards against losses. Mr W had declared knowledge and experience of high-risk investments and never disclosed a vulnerability. However, HL should have proactively identified obviously detrimental trading characteristics (unusually high volume, high losses, high charges) from June 2018 onwards, not just after introducing new policies in 2023-2024. The appropriate action would have been flagging losses and inviting Mr W to seek support, but not preventing trading or identifying a gambling addiction. Critically, the ombudsman found no evidence that earlier intervention would have changed Mr W's behaviour: he continued trading heavily after the May 2023 warning, and subsequently opened accounts with other providers where he continued detrimental trading despite their warnings. The June 2024 communication's apparent effectiveness was limited to prompting a complaint, not ceasing problematic behaviour or seeking help.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website