A High Court judge has dismissed a case made against the Financial Ombudsman Service for its handling of a compensation case regarding a film investment scheme.
In a hearing back at the end of November - but only released to the public at the end of last week - Judge Ouseley explained the claimant, accountancy firm Chancery, challenged by way of judicial review a decision made by the Financial Ombudsman Service in 23 January 2014.
Fos claimed it had jurisdiction to consider a complaint made against Chancery by investor Ian Robinson, however Chancery argued the ombudsman had no jurisdiction to deal with the complaint, because the advice which it had given concerned entry into a tax avoidance scheme rather than an investment.
It contended that tax avoidance advice fell outside the scope of the Fos’s jurisdiction and the scheme was not a “collective investment scheme”.
The case stems from October 2006, where Mr Robinson met Chancery with a view to “advise on tax planning of a non-controversial nature.”
It recommended Mr Robinson enter a film scheme, Prescience Media 1 LLP - described as a trading partnership and not an unregulated collective investment scheme.
He contributed £1.8m to the scheme, £450,000 from his own capital, and £1.35m via a bank loan.
In 2008, he made a further capital contribution of £500,000 and was elected chairman from 2009 to 2013.
Rebus Investment Solutions, on behalf of the complainant, made its complaint to Chancery in May 2012, stating that PM1 was an Ucis and that its client had not been assessed in relation to the relevant regulations.
Chancery’s reply of 8 October 2012 said PM1 was not a collective investment scheme but a trading partnership.
The letter also contended that the case was more suitable for a court because the compensation which Rebus would be seeking was likely to be far in excess of the Fos’ limit of £150,000.
In his conclusion, Judge Ouseley stated Fos regularly considers complaints in which the compensation might exceed £150,000.
He also said that the Fos’s decision was not “irrational” and that in this case the Fos decisions were “carefully considered”.
peter.walker@ft.com
