“I am aware there’s an ongoing investigation by the Serious Fraud Office. The outcome of any proceedings arising from this is not yet known and may be some way off. I am not in a position to make any judgment about the conduct of those involved in the Harlequin investment. But I acknowledge that it may be relevant to how I determine fair compensation for Mr D.
“I can understand why Kingswood considers that other parties are responsible, either wholly or in part, for Mr D’s loss. I have considered that very carefully, along with more general issues of causation and foreseeability.
“No liability will arise for an adviser who has given suitable advice even if the investment is later fraudulently managed. But the position is different where the consumer would not have been in the investment in the first place had it not been for the unsuitable advice.
“In that situation it may be fair to assess compensation on our usual basis – aiming to put the consumer in the position he would have been in but for the unsuitable advice - notwithstanding any arguments around any fraud breaking the chain of causation.”
The ombudsman ruled Mr D should be compensated for his losses from investing in Harlequin Property “in full” plus £300 for the distress and inconvenience caused.