A financial adviser has swerved a heftier compensation bill because of Brexit.
In June 2015 a client, referred to as Mr T, sought retirement planning advice from Hanson Wealth Management and it recommended investing in the Royal London Governed Portfolio four.
Hanson stated the fund was suitable for his agreed "high medium" attitude to risk and his investment objectives.
But in August 2015, Mr T contacted Hanson to say he was worried about market volatility and it was agreed to invest in a cash deposit fund instead.
Mr T said this should have been a temporary move but, following the retirement of his adviser, the new adviser failed to contact him or return his calls and the annual review due in June 2016 didn’t take place.
Investment in the governed portfolio fund eventually took place in February 2017 following a meeting with another new adviser and Mr T complained his investment would have considerably increased if it had been switched out of the cash fund earlier.
Hanson agreed an annual review of Mr T's risk profile and, if necessary, re-alignment of funds should have taken place in June 2016.
The advice firm offered to refund its annual fee of £208 and pay Mr T £100 for the inconvenience caused.
But Hanson didn’t agree to pay compensation for Mr T not being invested in the governed portfolio fund.
The advice firm argued there was uncertainty in the markets ahead of the Brexit referendum and, if a review had taken place in June 2016, it is unlikely he would have decided he wanted to risk investing in equities at that time.
In a final decision, ombudsman Elizabeth Dawes said based on the email exchanges between the client and the now retired adviser it was clear the investment in the cash fund was only intended to be temporary.
But she said it was reasonable to keep the money in the cash fund for an extended period because of market volatility and uncertainty.
Hanson Wealth Management said the next time it had contact with Mr T was in December 2016 but the client claimed he phoned twice in the Spring of 2016 to ask about investment in the governed portfolio fund.
There is no record of this contact so Ms Dawes said she not persuaded that Hanson Wealth Management had failed to carry out Mr T’s instructions.
While a meeting to check Mr T’s attitude to risk should have taken place in June 2016, Ms Dawes said if this review taken place it was unlikely that a recommendation would have been made to invest in the governed portfolio fund at this time.
As a result, Ms Dawes ruled investment in the governed portfolio fund was unlikely to have taken place if contact had been made with Mr T at any point from Autumn 2015 and during 2016.
She said: "I cannot conclude with enough certainty that Hanson Wealth Management’s change of advisers and lack of contact led to Mr T being disadvantaged. I am satisfied that throughout this period Mr T would have been aware that the switch out of the cash fund hadn’t taken place.
"If Mr T had decided to make this switch or wanted advice about the timing of the move back into the market I consider it is reasonable to have expected him to make greater efforts to ensure this happened.
"As he didn’t, my conclusion is that Mr T was happy to remain in the cash fund."
The ombudsman ruled Hanson should just refund its annual fee of £208 plus pay Mr T £100.
emma.hughes@ft.com
