Lighthouse Advisory Services Limited has been unsuccessful in challenging a Financial Ombudsman Service ruling that it should give a client a full refund of advice fees plus 8 per cent a year interest.
A client, called Mr S, met with a Lighthouse adviser several times in 2011 and signed a fee agreement of £500.
In August 2012, a meeting was arranged between Mr S and the adviser but this meeting did not take place.
Lighthouse offered to refund the £500 fee, but the client said he was was not satisfied with the offer and referred the matter to the ombudsman.
A Fos adjudicator thought the complaint should be upheld and proposed that Lighthouse should add simple interest at 8 per cent a year to the refunded fee.
But Lighthouse disagreed with the adjudicator’s assessment and pointed out some work had been undertaken and there was a discussion about suitable products and providers.
The intermediary argued interest should not be added to the offer to the client.
If interest was added, Lighthouse argued this should be calculated at 1 per cent more than Bank of England base rate.
With regard to the missed meeting, Lighthouse said the adviser had contacted Mr S to tell him that he was running late due to mitigating circumstances.
It was agreed to meet again at a mutual time, but another meeting failed to materialise.
However Mr S denied he had been informed the adviser was going to be late for the meeting and did not agree any further meetings were arranged.
Mr S told Fos he had often found it difficult to contact the adviser.
Lighthouse Advisory Services Limited has now been ordered to give a client a full refund of £500 and add interest at 8 per cent from the date the fee was paid to the date of settlement.
If Lighthouse Advisory Services Limited thinks it should deduct tax from the interest, the ombudsman stated it should give Mr S a tax deduction certificate.
Mr S may be able to reclaim the tax, depending on his circumstances.
In addition, Lighthouse Advisory Services Limited was ordered to pay Mr S £100 for the inconvenience he has been caused.
In his final ruling, Doug Mansell, ombudsman, said Lighthouse was wrong to argue interest should not be added at 8 per cent a year.
He said: “I have not seen evidence why the adviser was not able to proceed to the position where he could make a recommendation. He had well over a year to do so.
“I therefore think it is reasonable for Mr S to receive a refund of the fee he paid. While the adviser did some work, I don’t think Mr S had anything like the level of service he was entitled to expect.
“Where a consumer is denied access to their money, we will normally add interest to reflect this.
“I also think Mr S has suffered some inconvenience as a result of how he was treated. This is not only in him going to a meeting at the adviser’s office which the adviser did not attend. It is also because of the entire timescale involved.
“Mr S approached Lighthouse seeking financial advice. The adviser had many months in which to prepare a recommendation. But none was forthcoming.”
emma.hughes@ft.com
