Investor hits out at Fos ‘retrospective’ time bar

Investor hits out at Fos ‘retrospective’ time bar

An investor who unwittingly triggered a complaint ‘time bar’ following losses of £145,000 has criticised the Financial Ombudsman Service (Fos) after it dismissed his pleas for redress.

Mark Sunderland claimed he had no idea he could lodge a formal complaint with his old adviser, Hampshire-based S4 Financial, until a review by St James’s Place in 2014 revealed his investments were likely to have been unsuitable.

He said: “I thought the losses were just bad luck, and for £100 a month ongoing advice, S4 assured me I would get most of it back.”

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Emails from Mr Sunderland to S4 in 2010 did not constitute a formal complaint, according to a June 2015 letter from Fos seen by Financial Adviser.

But the ombudsman said Mr Sunderland had taken too long in escalating his concerns because “more than three years have passed since the consumer knew or could reasonably have known that he or she had cause to complain”.

Mr Sunderland was classed by S4 as a “balanced investor”, and the firm put £175,000 – 55 per cent – of his cash in stocks and shares Isas. The remaining 45 per cent – £145,000 – was placed in six property funds and an enterprise investment scheme (EIS).

The property funds included unregulated overseas scheme Merchant Place, described by Merchant’s compliance spokesman as being for sophisticated investors.

After seeing heavy losses to his portfolio, Mr Sunderland emailed S4 Financial in October 2010 to ask if he should terminate the Merchant investments, but S4 assured him they would recover.

By 2012, three out of six had lost all of their value, later to be joined by the other three.

The FCA defines a complaint as “any oral or written expression of dissatisfaction, whether justified or not” about a financial service under the jurisdiction of Fos where the complainant alleges loss, material distress or material inconvenience.

Mr Sunderland said his anxious requests to S4 for information about his losses should have been enough to meet the FCA definition of a formal complaint.

Tim McKechnie, managing director at S4, said the firm “respects the Financial Ombudsman Service process and the findings of the ombudsman’s decision”.

Advisers have said the rules are clear on what constitutes a complaint in the eyes of Fos.

Philip Stevenson, a chartered financial planner at Ark Financial Planning, pointed out that poor performance was not grounds for redress, and Mr Sunderland would have needed to make his complaint on the basis of potential mis-selling.

Ian Else, a financial planner at Bristol-based Ovation Sound Financial Management, said he would not consider Mr Sunderland’s portfolio ‘balanced’, given the higher risks posed by the EIS and property investments.