Brewin Dolphin has been told to compensate a client after it failed to swiftly arrange the transfer of funds he held within an Isa.
The client, referred to as Mr M, invested in a fixed growth bond - in a cash Isa - that matured in April 2015.
His Isa manager wrote to him to tell him his funds would be held in a client money account for six months to preserve its tax free status for that period.
But it would send him the proceeds and he would lose tax benefit of the Isa if he didn’t provide instructions within six months of maturity.
Mr M did nothing about the funds until the Isa manager wrote to him again on 29 September asking him for his instructions, reminding him about the deadline and the consequences of not providing instructions.
The one thing you don’t want to do is lose your Isa allowance.As a result of receiving that letter Mr M contacted Brewin Dolphin by telephone on 1 October.
In that telephone call he made Brewin Dolphin aware there was a deadline for transferring his Isa.
He stated: “But what has prompted me to phone you is that… I had an investment, again it’s an Isa investment, with... and it matured oh about five months ago…
“I received a letter from them yesterday, by the way this is just about to run out, you’ve three or four weeks before it actually loses its Isa status”.
The ombudsman stated this made it very clear there was a deadline in place and there wasn’t much time.
The adviser said in response: “If you can bring in the paperwork that you’ve got we can then make a start…
“I need to do a report to you so it’s not just going to happen overnight, but at least it means you can go back to (the Isa manager) and say look it will be transferring to Brewin Dolphin the process has started.
“The one thing you don’t want to do is lose your Isa allowance.”
There was then a meeting on 7 October when Mr M handed relevant documents to the adviser including the letter of 29 September.
But for some reason there was no contact with the Isa manager by the end of the deadline so Mr M received the maturity proceeds and lost the benefit of his Isa.
Brewin Dolphin said it didn’t do anything wrong for various reasons and pointed out Mr M didn’t contact the Isa manager as the adviser suggested.
But the ombudsman ruled the only time the adviser mentioned this is in the call on 1 October and this is not advice as Brewin Dolphin suggested.
In a final decision, Philip Gibbons, ombudsman, ruled Brewin Dolphin failed to act with the urgency it needed to having been made aware of the deadline.
Mr Gibbons said: “I acknowledge the transfer couldn’t take place immediately but it seems to me the adviser could have taken action sooner – it doesn’t appear that the adviser made any contact before the deadline of 23 October.
“It is possible that even if the adviser had acted quicker, the transfer may still not have happened. But I am satisfied that - on balance - Mr M lost his Isa wrapper because the adviser didn’t provide the information it should have done to the Isa manager before the six month deadline ran out.”
But the Financial Ombudsman Service didn’t think Mr M had suffered any loss because of Brewin Dolphin’s failure to transfer the Isa quickly enough.
The current allowance for dividend income meant he could still invest the money that should have been transferred and receive dividend income form that without paying tax.
However the ombudsman ordered Brewin Dolphin should pay £150 for the trouble and upset caused.
emma.hughes@ft.com
