Gemini Wealth Management Limited has been told to compensate a client who was told to invest in a Capital Investment Bond.
The client, referred to as Mrs A, complained Gemini’s charges were unfair, unclear and not proportional to her investment.
Gemini said the charges were explained in line with the requirements of the regulator at the time the bond was recommended in April 2007.
A Financial Ombudsman Service adjudicator agreed Mrs A was made aware of the product charges and said the company didn’t do anything wrong in the way it explained its charges.
But when he looked at the case he stated he was unsure if the adviser assessed her risk profile accurately.
While the fact find included a risk profile for Mrs A the questions used to help the adviser assess the appropriate profile were incomplete.
The suitability letter sent by the adviser after he met with Mrs A also had a different risk profile to the one identified in the fact find.
Reviewing the case Philip Gibbons, ombudsman, said Gemini’s assessment of Mrs A’s risk profile was confusing.
He said: “The adviser identified her risk profile as ‘Realistic to Aggressive’ which was level six in the table. It is not possible for me to know how he has arrived at that profile based on the information I have seen.”
In the suitability letter the adviser referred to Mrs A’s attitude to risk as being ‘realistic’, which was a lower risk profile (level five) than the adviser set out in the fact find.
Gemini sent another risk profile questionnaire to Mrs A at the end of 2007.
This was returned by her in February 2008 - only nine months after she had taken out the bond.
Based on what she put in the questionnaire Gemini identified her risk profile as cautious. This was level three in its table of risk, a lower risk category than either the fact find or suitability letter.
Mr Gibbons said: “I accept a customer’s risk profile can change over time. But this is the only evidence I have been provided with where Mrs A answered questions which could establish her risk profile.
“As this was completed only a few months after she saw the adviser I think this is more likely to reflect what her true risk profile was at the time of taking out the bond.”
Gemini agreed the risk level set out in the suitability letter was wrong and this was a mistake.
Gemini has been told to compare the performance of Mrs A’s investment with that of the benchmark and pay the difference between the fair value and the actual value of the investment plus interest.
