Positive Solutions has been ordered by the Financial Ombudsman Service (Fos) to compensate a couple for unsuitable advice and tax liabilities arising from investments.
Between 2005 and 2008, Mrs B and Mr H made several investments in bonds, with several switches and partial surrenders occurring in the following years.
The pair said the objective for their investments was to assist their subsistence during the period in which they sought to establish their new business.
They said that, overall, the investments were mainly dependent on the re-mortgaging (and equity release) of their home – which raised £200,000, the majority of the money used for the investments.
In 2017, only around £1,500 was left in two of the bonds.
A tax liability arose from the investments around 2015, which Mrs B and Mr H said was unexpected.
They made a complaint to Positive Solutions, which was bought by Intrinsic in 2013, and asked to be put in the position they would have been in if none of the investments had taken place.
The firm, based in Newcastle upon Tyne, responded that its responsibility for the adviser stopped in December 2010, when he stopped being authorised through Positive Solutions.
The firm also argued that there is no evidence of re-mortgaging advice given to the couple, and that at the time of the complaint the investment events were outside the relevant time limits.
The adviser, however, accepted some responsibility for the tax liability that arose from the investments and had personally repaid Mrs B and Mr H around £32,000 redress for that.
Positive Solutions made a settlement offer to pay the net remainder of the tax liability in addition to a payment of £1,000 for the trouble and upset they had been caused.
This offer was made in the context of goodwill, however in terms of the merits of the complaint Positive Solutions concluded that the adviser’s investment advice was suitable.
Mrs B and Mr H did not consider this outcome, and offer, to be sufficient. They asked for compensation for unsuitable investment advice too.
In his determination, ombudsman Roy Kuku addressed this issue – since the firm had already volunteered to solve the tax liability issue and the borrow-to-invest issue was out of time.
While Positive Solutions argued the couple made an informed decisions about their investments based on ample information given to them, and based on their acceptance of the high risk warnings, Mr Kuku argued the relevant question was more about the firm's duty to "recommend suitable investments to them that matched their circumstances".
He said: "I am not persuaded to draw the inference that Positive Solutions has invited us to draw – that is, to conclude from their new business venture at the time that Mrs B and Mr H were high risk takers.
"It is not unreasonable to say that it should have been foreseeable to Positive Solutions that Mrs B's and Mr H's business (or, arguably, the average start-up business) would need a time (perhaps a number of years) to find its feet.