Partially upheld: Investment mis-selling complaint against St. James's Place Wealth Management Plc

Decision detail

Summary

Mrs W, aged 78/79, complained about investment advice from SJP given in 2016-2017 following the sale of inherited shares. She alleged the recommendations were unsuitable given her age, lack of experience, and failure to preserve Business Property Relief, and that alternatives like BPR schemes or Discounted Gift Trusts were unfairly disregarded. SJP recommended £1.4m in Loan Plans, £560,000 in EIS schemes, life assurance policies, and other investments to address her objectives of tax mitigation, income generation, and gifting flexibility. The ombudsman found the recommendations suitable because the EIS products provided multiple applicable tax benefits (£92,000 income tax reclaim, £540,000 capital gains deferral, potential IHT exemption), Mrs W had sufficient investment experience and had explicitly stated willingness to take higher risk for tax benefits, and the Loan Plans met her needs for capital access and avoiding immediate IHT charges. The complaint was partially upheld only regarding SJP's delayed refund of overpayments for a cancelled service, for which 8% simple interest was ordered.

The Ombudsman's reasoning

The ombudsman found that SJP's recommendations were suitable because: (1) the EIS products provided multiple tax benefits (income tax reclaim of £92,000, capital gains deferral of £540,000, and potential inheritance tax exemption through BPR) that aligned with Mrs W's stated objectives; (2) while EIS carries higher risk, Mrs W had sufficient investment experience through holding private shares and a diversified portfolio, and had explicitly stated willingness to take higher risk for tax benefits; (3) the EIS exposure of approximately 10% of her liquid wealth was appropriately diversified across her overall portfolio; (4) the Loan Plans met her needs for gifting flexibility, capital access, income generation, and avoiding immediate inheritance tax charges; (5) alternative products like Discounted Gift Trusts or standard BPR schemes would not have met her complex multi-faceted tax mitigation needs as comprehensively; (6) the life assurance policies on a level term basis were suitable given the uncertain nature of future inheritance tax liability. However, the ombudsman upheld the complaint regarding the cancelled service overpayments, finding SJP should have identified and refunded them sooner.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website