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

Decision detail

Summary

Mr W complained that Hargreaves Lansdown failed to 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 identified and intervened much earlier, particularly after 2021 when FCA vulnerable customer guidance was published. HL provided an execution-only service and did not contact Mr W about detrimental trading until June 2024, when accounts were nearly depleted. The ombudsman found HL should have identified potentially detrimental trading from June 2018 onwards and taken action earlier, but concluded that any fair intervention would have been limited to flagging losses and inviting support. Critically, the ombudsman found that earlier communication would likely not have changed Mr W's behaviour, as evidenced by his continued trading with other providers after HL's June 2024 intervention. The complaint was not upheld and no compensation was awarded.

The Ombudsman's reasoning

The ombudsman found that while HL had regulatory obligations under Principles 2 and 6 and COBS 2.1.1R 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 made clear it would not provide safeguards against losses and Mr W had declared knowledge of high-risk investments. However, HL should have proactively identified obviously detrimental trading characteristics (high volume, high losses, high charges) rather than relying solely on client self-disclosure. The ombudsman found HL should have identified potential detriment from June 2018 onwards and taken action earlier than June 2024. However, any fair action would have been limited to flagging losses and inviting Mr W to seek support—not preventing trading or identifying a gambling addiction. Critically, the ombudsman found that earlier communication would likely not have changed Mr W's behaviour because: (1) the May 2023 communication had no impact on his trading; (2) Mr W must have been aware of significant losses yet continued trading; (3) after the June 2024 communication, Mr W opened accounts with other providers and continued potentially detrimental trading; and (4) Mr W did not seek help for gambling addiction even after HL's intervention. The ombudsman concluded that Mr W's subsequent trading with other providers was relevant evidence of what would likely have occurred with earlier HL intervention.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website