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Fos throws out Nucleus conflict of interest claim

Fos throws out Nucleus conflict of interest claim

Platform Nucleus has had a case against it dismissed by the Fos, after a couple claimed the platform failed to inform them their investments had been suspended due to a conflict of interest.

In 2014, Mr and Mrs B complained they had not been made reasonably aware that three of their investments in unregulated collective investment schemes had become illiquid.

The couple also complained there was a conflict of interest, after finding out their former adviser, - who recommended the illiquid investments in 2009 - had shares in Nucleus.

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In addition, Mr and Mrs B accused the platform of misrepresenting the value of the three holdings, failing to transfer the £1,900 cash quickly enough to a new provider, and continuing to pay the adviser on the illiquid holdings.

The couple argued both Nucleus and the advice firm - which entered into administration in May 2014 - were responsible for the losses they had suffered, and said it was unfair Nucleus still applied its administration charges for the illiquid holdings.

Nucleus offered the couple £200 in compensation for any distress and inconvenience it caused and for its delays in dealing with their complaint.

The platform offered a further £152 (8 per cent of £1,900) for the loss of investment growth.

A Fos adjudicator concluded that £352 was a “fair and reasonable” settlement, a decision that was subsequently backed by ombudsman Lesley Stead.

“I don’t think that Nucleus has done anything wrong except for the delayed transfer. Once the matter was referred to us, Nucleus offered to put matters right in a fair and reasonable way,” read the final decision.

Addressing the couple’s specific complaints, the adjudicator said statements issued by Nucleus every six months explained “sufficiently clearly” which holdings were illiquid or suspended.

The Fos added Nucleus was not responsible for the advice to invest in the three Ucis, plus the way Nucleus valued these illiquid holdings was similar or identical to other providers.

Historically, the Fos added it was a prerequisite for advisers to have shares in Nucleus if they wanted to use its platform, but such shares did not give an adviser any controlling or material interest.

Mr and Mrs B did not accept the adjudicator’s findings and maintained Nucleus had provided misleading information.

The pair also said the Fos should not rely on what it considers normal practice for providers and should instead provide advice to the Financial Conduct Authority on why things go wrong, in order to find new ways of helping consumers.

The ombudsman disputed this, adding it does tell the FCA what it sees, so the regulator can decide how to evolve its rules.

katherine.denham@ft.com