I would be intrigued to know how the Financial Ombudsman Service (Fos) came to its conclusions in the recent ruling against Philip J Milton & Company Plc.
The case centres on a couple with a medium attitude to risk and an objective of some income generation.
After investments performed poorly, the Fos accepted that the investors’ risk classification had been correct, but ruled the investment portfolio was unsuitable.
I haven’t seen the portfolio so am not about to hold forth on the propriety of that ruling, but what is incomprehensible to me is the restitution proposed.
The Fos has said the performance should be compared to that of the FTSE Apcims Income index with an additional payment of 8 per cent interest for each year from date of transfer to date of settlement.
How is that, by any measure, putting these clients ‘in the position they would have been had they not received the (erroneous) advice?
If the Apcims index is deemed to have been the right sort of portfolio for the clients, (which it seems is itself a leap in the dark from assessors not, as I understand it, required to be qualified), surely anything over and above the returns that that would have given is acting only to put the investors in a better, not the same, position.
More and more, the Fos seems to resemble other archaic bodies which seemingly make up rules as they go along.
How much better if it laid down the prescriptions it applied in advance. Then we would all know the field we were playing on and not be subject to regulatory ‘second-guessing’.
Ivor Harper is director at Park Financial
