Partially upheld: Service failures generally complaint against Hargreaves Lansdown Asset Management Limited
Financial Ombudsman decision DRN-6449030 of 2026-06-26T00:00:00+00:00. Service failures generally complaint against Hargreaves Lansdown Asset Management Limited. Outcome: Partially upheld.
Decision detail
| Reference | DRN-6449030 |
|---|---|
| Decision date | 2026-06-26T00:00:00+00:00 |
| Firm | Hargreaves Lansdown Asset Management Limited |
| Product | Investment |
| Claim type | Service failures generally |
| Outcome | Partially upheld |
| Remedy | HL must pay Mr M a total of £500 in compensation (inclusive of any amounts already paid) for disappointment, inconvenience, miscommunication, and time and effort spent resolving the matter. HL must assist Mr M with transferring his CLC holdings to another broker at no cost to Mr M (no professional fees charged by HL). No compensation for claimed direct financial losses. |
Summary
Mr M, an experienced investor, invested £10,000 in a VCT (CLC) via Hargreaves Lansdown in November 2024, expecting to automatically reinvest dividends in a tax-efficient manner based on information available on HL's platform. When he received his first dividend in April 2025, HL failed to reinvest it and subsequently informed him that automatic reinvestment was not available for VCTs. Mr M complained that HL had provided inadequate and misleading information, and claimed approximately £1,200 in financial losses. The Ombudsman found that while HL should have been clearer about VCT exclusions from its automatic reinvestment service and provided poor complaint handling, the claimed financial losses could not be attributed to HL's failings. The Ombudsman upheld the complaint partially, ordering £500 compensation for distress and inconvenience and free assistance transferring holdings to another broker, but rejected compensation for financial losses.
The Ombudsman's reasoning
The Ombudsman found that while HL's information was not explicitly misleading, it was not sufficiently clear that automatic dividend reinvestment was unavailable for VCTs. The Ombudsman acknowledged Mr M's frustration but concluded that: (1) as an execution-only client, Mr M bore some responsibility to seek clarification before investing; (2) automatic reinvestment of VCT dividends in a tax-efficient manner is not a mainstream practice across platforms; (3) Mr M's financial objective required further investigation and potentially independent financial advice before investing; (4) the poor communication and complaint handling caused genuine distress warranting compensation; (5) however, the claimed financial losses could not be attributed to HL's failings as Mr M received his dividends in a tax-efficient manner and the benefits advertised were delivered. The Ombudsman rejected the investigator's recommendation for financial loss compensation, finding it disproportionate given the execution-only nature of the relationship and the complexity of the investment.
How this compares
| Group | Decisions | Uphold rate |
|---|---|---|
| Hargreaves Lansdown Asset Management Limited, all decisions | 600 | 17% |
| Service failures generally, all decisions | 34,193 | 32% |
| Investment, all decisions | 14,180 | 34% |
Source
Read the original decision on the Financial Ombudsman Service website