Sanlam Financial Services Group  

Sanlam must cough up cash for unsuitable advice

Sanlam must cough up cash for unsuitable advice

The Financial Ombudsman Service (Fos) has criticised wealth manager Sanlam for providing "unsuitable" advice to a client.

The regulator was adjudicating on a case brought by a Sanlam client.

The client said he was incorrectly told to invest in a product that had a time horizon significantly longer than was suitable for him.

The ombudsman also found the client was placed into a life insurance policy that was not needed, as part of the same investment.

The client had invested £70 a month into a regular savings plan, beginning in 1990.

The client discontinued the savings plan after about 15 years, but kept hold of the investment in order to benefit from any increase in value.

The regulator found the investments made on his behalf by Sanlam exposed the client to a greater level of risk than was appropriate.

Sanlam had contended that the client was an experienced investor, and that it was not required to place a time limit on the investment.

But the ombudsman said the specific recommendation made to the client was unsuitable as the fund the client contributions were invested in appeared to carry a higher level of risk than the client was likely to have wanted.

Primarily, the ombudsman ruled the plan was unsuitable on the basis that it was a long term product that only really became efficient as a savings vehicle once it had been maintained for 20 years or more.

The ombudsman said there was little in the documentary evidence produced to indicate the client wanted an investment with the time horizon as far into the future as the product he owned through Sanlam.

Sanlam was ordered to compensate the client for the loss.

david.thorpe@ft.com