The Financial Ombudsman Service (FOS) ruled Chiltern Consultancy should reimburse the £7,392 fee plus interest to the unnamed client, as well as a total of £250 for inconvenience and distress caused, including by failing to provide promised advice on inheritance tax (IHT).
The FOS ruling related to advice given to the client, a ‘Mrs A’, by Chiltern in 2012.
It charged 2% of her existing holdings, plus an annual charge, for recommending the transfer of her investments from her discretionary manager (DFM) to a platform to help meet her strong preference for ethical solutions.
But after complaining about the involvement of a third party introducer in the transfer and the quality of the advice given, Mrs A said she did not want to proceed.
Chiltern rejected her complaint and offered £100 as a gesture of goodwill, before later offering to refund part of the upfront fee.
After reviewing the case, the FOS declared it was not satisfied Chiltern conducted the proper research and due diligence to justify switching management of Mrs A’s funds.
It added it could find no sound reason for the switch to meet the client’s ethical preferences; her original DFM specialised in ethical investments but Chiltern appeared to decide the presence of particular stocks in Mrs A’s portfolio rendered it inappropriate.
The FOS noted Chiltern did not ask the DFM to explain the presence of the stocks, adding it would have been “surprised” if it couldn’t justify the picks given its ethical model.
To compound matters, the alternative funds selected – two ethical funds and two managed funds – also contained similar ‘unsuitable’ stocks, such as pharameutical, oil or gas company shares, as those in her original portfolio.
Though the FOS noted it was satisfied with the advice Chiltern gave to Mrs A in respect of her investment bonds, it concluded: “Mrs A was clearly dissatisfied with the [other] advice she received from Chiltern and decided not to act on it.
“In light of the quality of the advice she received in respect of her portfolio, I am satisfied her conclusion that all of the advice she had received was sub-standard advice was, in the circumstances, reasonable.”