View more on these topics

Adviser ordered to pay redress after changing benchmark


A Hertfordshire-based advice firm has been ordered to pay a couple £10,000 compensation after changing the performance benchmark of their savings.

According to a Sunday Times report, a Financial Ombudsman Service investigation resulted in Wagstaffs Wealth Management paying compensation to couple David and Josephine Kelsall, who had saved more than £1m over 50 years.

The Kelsalls became customers of Wagstaffs in 2011. They were told the performance of their savings would be measured against the FTSE 100 index with dividends reinvested. However, in February, this was changed to being measured against the FTSE 100 without dividends being reinvested.

David Kelsall, who is an experienced investor and trained accountant, tells the Sunday Times said he did not understand what he was being told by Wagstaffs.

He says: “I just took the adviser’s word on trust. It was a rainy day, so I decided to go through everything. I soon realised there were discrepancies. It took me three days to work out what was going on and then two years to prove the case to the ombudsman.”

The FOS says the Kelsalls were misled. The £10,000 compensation represents a refund of one year’s advice fees as well as compensation for distress and inconvenience.

Wagstaffs told the FOS the change in the benchmark was “unfotunate” and it was not designed to mislead. It declined to comment for the Sunday Times article.



Aviva to challenge FOS decision amid legal uncertainty

Aviva has been allowed to judicially review a Financial Ombudsman Service decision after the adjudicator failed to give sufficient explanation as to why they departed from the relevant law. Speaking at the Royal Courts of Justice in London yesterday, Justice Jay said he was allowing the appeal on a technicality, as he was not convinced the FOS’s […]


FOS complaints against advisers fall 12%

Financial Ombudsman Service complaints against advisers fell 12 per cent between the first and second half of 2016. IFAs were hit with 1,189 complaints between January and June last year, which dropped to 1,044 between July and December, out of a total of almost 150,000 new cases at the FOS. Sesame continued to top the […]


High Court rejects asset manager judicial review of FOS complaint

An asset management firm has lost an appeal against a compensation order from the Financial Ombudsman Service after claiming it did not provide personal recommendations. The firm also claimed FOS’ decision was at odds with the finding of an FSA report. Full Circle Asset management provides model portfolio discretionary investment services to clients. Between October […]

European Opportunities: 'It’s nice when stock selection results in a macro tailwind'

Amid significant macro headwinds in August, Mark Page explains why his fund’s focus on stock selection has helped it outperform a falling market in August. BESbswyBESbswyBESbswyBESbswyBESbswyBESbswyBESbswyBESbswyBESbswyBESbswyBESbswyBESbswy


News and expert analysis straight to your inbox

Sign up


There are 41 comments at the moment, we would love to hear your opinion too.

  1. Using a price return index as a benchmark is a pretty egregious bit of bar-lowering, up there with Daffy Duck writing “1000 LBS” on a pair of black balloons and then bench-pressing them to impress the ladies on the beach.

    But ten grand for spotting it – given that Wagstaffs weren’t collecting a performance fee based on the P-easy benchmark, and that as far as I can tell, performance was decent – is a heck of a result.

  2. Just plain sloppy, not “unfotunate”

  3. Oh goody. Does that mean I can claim redress from the Government for changing the benchmark from RPI to CPI?

    • Did the Government tell you they were changing the benchmark; or did they just change it without informing you, and continue to present the new benchmark in exactly the same way they had presented the old one to you? That’s what Wagstaffs did to the Kelsalls, according to the Ombudsman’s report.

  4. A number of points spring to mind. Why would one change the benchmark anyway especially if total return is the objective. Why use the FTSE 100 as it’s a narrow, weighted index.

    Did the client lose anything as a consequence, if not what is FOS playing at? The client was an accountant and experienced investor but it took him 3 rainy days to work out what was going on?

    A most peculiar and whiffy case all round I reckon.

    • Just to clarify, the FTSE 100 including dividends was used as a benchmark for the previous Fidelity pension portfolio, before the investments were transferred to Wagstaffs’ recommended funds; and was therefore carried forward by Wagstaffs as a benchmark to compare with the performance of the new portfolio for reasons of consistency. The benchmark was then changed to the FTSE 100 excluding dividends without the Kelsalls being informed or consulted. This had the effect of overstating the performance of the investments Wagstaffs had recommended, and consequently misled the Kelsalls.

      With regard to the question of whether the Kelsalls lost anything as a consequence. They claim that they did lose out, and have the figures to prove it. They raised this as part of their complaint to the Ombudsman; but, with the Ombudsman still delaying coming to a decision after almost two years of considering the case, the Kelsalls requested that the Ombudsman narrow the investigation, and only judge on whether they had been misled by the benchmark being changed. At this stage, they simply requested a refund of the fees charged by Wagstaffs for providing nothing more than misleading advice during the period in question. They asked for this, because the Ombudsman’s investigation genuinely seemed like it would never end.

      The figures used by Wagstaffs in all of the periodic reports presented to the Kelsall were impossible for them to check since they were portfolio growth figures, as opposed to the percentage change in the FTSE 100 Index. The platform company have confirmed in writing that it would have been impossible for anyone to check these figures without access to their computer software.

      Tom Kelsall (the Kelsalls’ son)

      • A deadpan reference by the Ombudsman to the “considerable correspondence” she had to wade through suggests that the time taken may not have been entirely her doing.

        Your parents lost nothing; their assertion that they were owed damages boils down to (correct me if I’m wrong) the idea that if they’d managed their investments themselves they’d have performed better. And that if they had realised sooner that Wagstaff wasn’t doing as well as they wanted, they’d’ve moved them back to their own management sooner, and the difference between the performance of the hypothetical Kelsall portfolio and the Wagstaff portfolio throughout this time is their loss. This argument is extremely tenuous. Firstly because of the simple fact that it is impossible to know whether the Kelsalls’ self-management would in fact have outperformed Wagstaff. Secondly because if the Wagstaff portfolio was really underperfoming the hypothetical Kelsall portfolio, the FTSE 100 (either PR or TR) is neither here nor there – they had regular statements and a login for the fund platform so they could check the actual performance at any time (as the Ombudsman says) and compare it to what they would have rather invested it in. If they didn’t know at that time what they would have invested in, then the argument that the funds would have done better under self-management falls apart.

        Wagstaff did something which was naughty but didn’t cause any loss to the clients, something that usually gets you a few hundred quid for “distress and inconvenience”. £10,000 is a terrific result.

        The Kelsalls seem to have been under the common misconception that if you pay 1% per annum to an IFA or wealth manager this should guarantee you outperformance of at least 1% per annum. In other words using a wealth manager is free money. That’s not the case.

        • I can see the point you’re trying to make about being able to compare the ‘Wagstaffs portfolio’ with the hypothetical ‘Kelsall portfolio’; and, of course, it would be easy for anyone to compare the figures for these two portfolios if they were both being measured in terms of percentage investment growth. However, the figures provided by Wagstaffs for both the benchmark and the ‘Wagstaffs portfolio’ were for the ‘portfolio growth’, not percentage investment growth; and, as I have explained,these figures could not be replicated without the software used by the platform company.

          Comparing the portfolio growth of the ‘Wagstaffs portfolio with the percentage investment growth of the hypothetical ‘Kelsall portfolio’ would be totally meaningless. It’s not quite as simple as you’re making out; certainly not for an average pensioners like my parents.

          The idea that it is merely ‘naughty’ for an adviser to charge significant fees for providing misleading information is one that most members of the public would find quite alien. Thankfully, the Ombudsman agreed.

        • Sascha K, is the ‘deadpan’ reference you’re referring to the part where the Ombudsman says: ‘There’s been considerable correspondence about this matter, all of which I’ve considered. But I’ve concentrated on what I think are the main issues’?

          Perhaps you downloaded the audiobook version of the report; because I’m not sure how that can be considered ‘deadpan’… In fact, I’m sure even Steven Wright would struggle to get a laugh from that line.

          Maybe I’m missing something – unless your real name is Bill Murray; then I’m happy to bow to your superior knowledge.

      • “…overstating the performance of the investments…” ???? No, I don’t think so. The performance of the investments was what it was.

        But did the report overstate the performance of the investments RELATIVE TO the INCORRECTLY PERCEIVED benchmark? Yes, given that divis were no longer being compounded into the figure; unlike your father thought they were.

        However, he realised this after 3 days.

        So why claim 12 months’ worth of fees as compensation for supposedly being mis-Advised when this is clearly a case of mis-reporting? Albeit one that would have had no effect on their investments actual value.

        The fact is the benchmark is an arbitrary yard-stick to measure performance against. It isn’t THE performance.

        Clearly FOS thought your parents had a weak case otherwise they wouldn’t have deliberated for 2 years.

        The mind boggles.

        • You are quite correct, of course the benchmark isn’t the performance. But, as you also rightly say, the benchmark was used as a yardstick to measure the performance of the portfolio.

          The final complaint to the Ombudsman requested repayment of the fees based on the fact that Wagstaffs had promised to provide accurate information to the Kelsalls to allow them to make informed decisions about how to invest their pensions money. Their fees were charged on that basis.

          However, instead of providing accurate information, Wagstaffs changed the benchmark without telling the Kelsalls; which the Ombudsman accepts had the effect of misleading them.

          It’s difficult to see how anybody could take the view that Wagstaffs should keep the fees they charged when they failed to do what they had clearly promised at the outset.

          This willingness to mislead clients is an ongoing theme. When the benchmark issue was first raised with Wagstaffs, instead of admitting what had happened, the compliance officer promised the Kelsalls that he would thoroughly investigate the complaint alongside a third party compliance company. This reassured them a great deal; as, at that stage they still believed Wagstaffs would act in an honest, professional way. However, after a subject access request, and the involvement of the Information Commissioner, it became clear 18 months later that, despite Wagstaffs’ direct assurances, the third party compliance company did not play any part whatsoever in the compliance officer’s investigation.

          What boggles my mind is the fact that other clients could potentially be being misled in a similar way.

          • Your dad is described as an “active, informed and experienced investor” who had managed his own investments for 20 years before, for some reason, deciding to entrust them to a third party. He is quite clearly not an “average pensioner”.

            (My presumption is that the “some reason” was because he’d fallen victim to this misconception that if you pay 1% to a wealth manager they should guarantee to outperform something or other by 1%, i.e. wealth managers work for free.)

            Wagstaffs were quite clearly not being paid their 1%pa solely to provide accurate figures for the FTSE 100 TR. They were being paid to manage their investments. Providing an accurate benchmark on their regular statements was part of this, but an almost insignificant part, and their failure to do so caused the clients no loss. The assertion that they should forfeit their entire fee for failing on an insignificant fraction of the service provided for that fee is beyond what anyone would consider reasonable. (Including the Ombudsman.) It’s like suggesting that they should forfeit all their fees up to that point for making a spelling mistake or forgetting to forward a contract note. The Ombudsman has however decided to award a refund of over 50% of their fee to spare itself any more considerable correspondence which is a fabulous result.

          • The implication that, because David Kelsall was a trained accountant and had managed his own investments in the past, Wagstaffs should be given a bit more leeway (because you wouldn’t personally class him as an ‘average pensioner’) is difficult to understand. Your presumption about him falling victim to the misconception of their being a guarantee of outperformance to cover the fees is also unfair; as I have already explained, he had other commitments and wanted to reduce the time spent focusing on his pensions investments – nothing unreasonable about that.

            There is no doubt that the Kelsalls were happy with the service provided by Wagstaffs until the benchmark was changed. That has never been in dispute. At no stage has there been a suggestion that the full fees for the entire time should be refunded; only the fees since the benchmark was changed.

            Similarly, I am not criticising the Ombudsman for basing her judgement on the issue of whether the Kelsalls were misled by the fact the benchmark was changed without them being told, and not focussing on some of the other issues that she deemed to be peripheral; as this is exactly what the Kelsalls asked her to do, in order to help speed up her investigation.

            The idea that altering the benchmark was as insignificant as making a spelling mistake is really stretching the point. Comparing the performance of the portfolio against the performance of the benchmark (based on the portfolio growth figures provided by Wagstaffs – which were impossible for anyone to check without access to the platform company’s software) was the sole focus of the review meetings that were carried out by Wagstaffs.

            At the outset, in their investment plan, Wagstaffs explained to the Kelsalls that ‘you have overall responsibility for investing your own assets’, but they also promised they would ‘help you to carry out this responsibility with all possible care and skill’. It’s difficult to see how changing the benchmark without telling the Kelsalls fits in with that commitment.

            I understand that you seem to feel the Ombudsman was so panicked by the ‘considerable correspondence’ that she gave in and virtually bribed the Kelsalls to go away by paying them £10,000; but that is not an accurate representation of her judgement at all.

  5. MM do you have the case ref on this ?

    I wonder if they were bench marking against the FTSE then using tracker funds

  6. Oh wonderful maybe we can claim for the FSA/FCA moving goal posts, which has been much more eventful

  7. To be “…an experienced investor and trained accountant” and then admitting in the Sunday Times for all to read that “…he did not understand what he was being told by Wagstaffs” is all a bit embarrassing for Mr Kelsall snr I’d imagine.

    I’m glad I don’t take investment advice from him nor use him as my accountant. I wonder how many of his clients are now thinking the same thing?

    • There seems to be some confusion. ‘Mr Kelsall snr’ isn’t offering financial advice to anyone. He is a pensioner who, according to the Ombudsman, was misled by Wagstaffs Wealth Management.

      The idea that ‘Mr Kelsall snr’ should have been pouring over the figures provided to him and his wife by Wagstaffs is far-fetched in the extreme. Quite naturally, at that stage, they both trusted Wagstaffs to tell them the truth.

      Whether ‘Mr Kelsall snr’ was trained as an accountant or not doesn’t excuse Wagstaffs for changing the benchmark without informing the Kelsalls.

      What is more worrying is the question of whether someone with less investment experience than ‘Mr Kelsall snr’ would ever realise they were being misled by Wagstaffs in the first place.

  8. What I don’t understand is why, a portfolio with 80% global equities and 20% emerging markets, you would benchmark against the FTSE100? I guess that’s why we don’t use benchmarking….you are always comparing apples with bananas! In addition, having read the ruling, why were the Kelsalls using an adviser anyway as it seems it was their decision on whether funds were switched? All very strange.

    • The point you make about why the FTSE 100 was used at all by Wagstaffs is an incisive one. The platform provider has confirmed that, when the FTSE 100 Index excluding dividends was selected as a benchmark by the advisor (Simon Beedle of Wagstaffs) ‘at 8.53am on the 22nd February 2013’ to be compared against the performance of the Dimensional funds (that had been specifically recommended by Wagstaffs) during the review meeting later that day, the list of indices available through the platform at that time included the FTSE 100 Index including dividends, as well as the three MCSI Indices actually selected by Dimensional as the benchmarks for their funds in all of their marketing and fund performance literature. Why Mr Beedle didn’t choose the same benchmark that Dimensional used is a question for him to answer. In his reply to the original complaint, the compliance officer at Wagstaffs, Elliot Stewart, used convoluted, jargon-based terminology to seemingly suggest that, through their ‘Investment Committee’, Wagstaffs had developed more sophisticated methods of assessing the performance of the Dimensional funds that made up the Kelsalls’ portfolio than those used by Dimensional themselves. Only Mr Beedle would be able to honestly explain why he changed the benchmark to the FTSE 100 Index excluding dividends, and still continued to present it to the Kelsalls in the same way the FTSE 100 Index including dividends had traditionally been presented to them.

      With regard to why the Kelsalls were using an advisor in the first place, Wagstaffs Wealth Management as a company were originally recommended to the Kelsalls by Andrew Dagless, a Director of Wagstaffs Accountants in Stevenage. Because of various other commitments, the Kelsalls were keen to avoid having to spend too much time monitoring and researching their investments, and wanted to make decisions based on the information provided to them by Wagstaffs. The FCA state that a firm must pay due regard to the information needs of its clients and communicate information to them in a way which is clear, fair and not misleading; and this was the service Wagstaffs promised to supply to the Kelsalls, as well as being the basis upon which their fees were charged. While I accept everyone is entitled to their own opinion, I don’t personally think the average person in the street would view that as such a ‘strange’ situation.

    • Agreed Waistcoat, that kind of global equity investment (esp Dimensional funds) would have also have given a much better return over that period than the UK FTSE100 (inc. divi’s) anyhow, so the comparison with the benchmark and basis for complaint is rather odd.. the FOS agree after all there has been no loss and said the wagstaff portfolio performed well.

      Seems more to this than what meets the eye… the FOS almost infer as much too.. would be interesting to hear the advisers side to this one.

      • I’m not sure why anyone would view it as ‘rather odd for’ a customer to be unhappy with the fact that a company had charged fees for a specific service over a two year period (i.e. providing them with accurate information that wasn’t misleading, in line with the FCA rules), only to find that the company had been misleading them.

        I agree, it would be very interesting indeed to actually hear the truth from Wagstaffs about why they changed the benchmark without telling the Kelsalls. They seemed unable to give a consistent story. At various times over the weeks and months following the initial complaint they claimed:

        i) The benchmark shown on the portfolio reports was not relevant, as the work carried out for the Kelsalls by Wagstaffs focussed on more general matters [which was proved to be completely untrue];

        ii) The benchmark was changed by Mr Beedle from the FTSE 100 Index including dividends (which was used for comparison with the Kelsalls’ Fidelity portfolio at the ‘initial review’ in August 2011) to the FTSE 100 Index excluding dividends (which was subsequently used for comparison with the Kelsalls’ Dimensional portfolio) because the benchmarks were used for different purposes in each case [which, again, was proved to be utter nonsense];

        iii) Mr Beedle deliberately chose the FTSE 100 Index excluding dividends as a benchmark to provide continuity with the benchmark he used at the ‘initial review’ in August 2011 [which was, quite simply, a lie; as it was undeniably the FTSE 100 including dividends that was used at the ‘initial review’ in August 2011]; and

        iv) The benchmark was not selected by Mr Beedle on the 22nd February 2013, but was chosen back in 2011; when the platform company’s system did not offer the option to display the FTSE 100 Index including dividends as a benchmark, nor any of the other indices that only became available in November 2012 [which was not the case, as proved by a letter from the platform company confirming that the FTSE 100 excluding dividends was chosen by Simon Beedle of Wagstaffs ‘at 8.53am on the 22nd February 2013’ – and the list of indices available through the platform at that time included the FTSE 100 Index including dividends, as well as the three MCSI Indices actually selected by Dimensional as the benchmarks for their funds in all of their marketing and fund performance literature].

        • I still have issues understanding the full story here.

          Had the advice firm given your dad incorrect advice or had your dad suffered a loss they would have compensated for that loss – but they did not.

          Indeed, they only refunded one years worth of advice fees, so the FOS did agree that the adviser had done a good job for at least part of the time your dad was a client, and they also confirmed that reviews took place and fees were properly disclosed and also said the performance was good.

          The FOS are normally very happy to compensate with 8% compound interest for any losses and to also refund all fees. However that the FOS only refunded part of the advice and not the full amount your dad wanted.

          Mistakes happen (which looks like the case here), accept this and take a deep breath…. Your dad has not suffered a loss and other than the one mistake it would appear the adviser did a good job. Move on!

          Indeed, they only refunded one years worth of advice fees, so the FOS did agree that the adviser had done a good job for at least part of the time your dad was a client, and they also confirmed that reviews took place and fees were properly disclosed and also said the performance was good.

          The FOS are normally very happy to compensate with 8% compound interest for any losses and to also refund fees. However that the FOS only refunded one years fee (plus a small amount extra) and not the full amount your dad wanted.

          Mistakes happen (which looks like the case here), it seems there is a lot of anger here from you and your dad which is not constructive!

          • Incidentally, which parts of that comment did you plan to delete before sending?!

            It simply isn’t true to say that the Ombudsman only refunded a proportion of the fees from February 2013 onwards because she thought Wagstaffs ‘had done a good job’ for some of this period. On the contrary, she clearly said that, in switching the benchmark, ‘the business didn’t act as it should’ and that ‘Mr and Mrs K were misled’. The fees were only partially refunded because the Ombudsman felt that the Kelsalls would have paid fees elsewhere if they had moved their investments in February 2013 – not because Wagstaffs ‘did a good job’.

            I’m not sure whether you are deliberately misrepresenting the facts, or just haven’t understood the report. Either way, all things considered, it’s a bit below the belt for you to tell me to ‘Move on!’; or, alternatively, advise me that my comments are ‘not constructive’ – depending on which paragraphs you meant to delete.

      • JM2017, please could you point out where in the Ombudsman’s report, specifically, she ‘almost infer[s]’ there is ‘more to this [case] than meets the eye’? I assume you’re referring to a particular part of the report, but I can’t find it.

  9. 1) £10,000 is a large fee, regardless of all else, was it really justified?
    2) I suspect Mr Kelsall may now have more time on his hands to ‘watch’ his money and so is better released from advisory oversight in any event, so look at the historical gains, learn a lesson and accept the outcome and move on… both parties!!

  10. If the client had gone to court with this they would almost certainly have lost the case. The only, somewhat tenuous, argument I can see is that they been informed of the change in benchmark they would have decided to manage the portfolio themselves and saved the fees. However, the fees paid were for advice which was provided and was not dependent on any given benchmark. On balance I think a judge would find it difficult, on balance, to conclude that the client had lost anything as a result of what happened. It wasn’t necessarily right but they suffered no quantifiable loss and may well have been better off.

  11. I suppose there will always be lots of unknowns in a case like the one here. What would happen if the case had gone to court instead etc. At the end of the day the FOS thought the clients had been misled. Nothing much anyone can do about that now.

  12. Seems to me like the IFA probably just made an error and maybe chose the wrong index to use as the benchmark. With the best will in the world mistakes do sometimes happen, that’s just life. Even though it seems the loss claimed might be open to debate I cant see how this mistake wasn’t noticed sooner by the company though to be honest. I would think it would have been identified sooner rather than later through the review process. Wonder what benchmarks if any they use for other clients and which fund they are invested in. As normal its difficult to get the full picture from the report.

  13. Something funny here. Does Tom Kelsall work in Financial Services? He seems to know his way around this site, which I believe is not one that the general public is familiar.

    • I would imagine it’s refreshing for you to exchange messages with someone using their real name, Harry. I certainly respect the fact that you’re not hiding behind an ‘online alias’.

      I remember Money Marketing ran a story a few years ago questioning whether they should continue to allow anonymous comments; and my view now is the same as it was then. Apart from in exceptional circumstances (such as certain whistle-blowing cases, for example), I believe people should stand by the comments they write.

      It’s noticeable across the internet that the most vocal contributors to online message boards often use a pseudonym instead of identifying themselves. I can only assume that, in the case of this story, people wish to actively condone Wagstaffs’ questionable practice (as was clearly highlighted by the Ombudsman in her report), without having their views reflect badly on them or the companies they work for.

  14. I agree with both sides of the argument here. The fact that the benchmark was changed to make the performance of the funds look better was dishonest and quite frankly, if i was the client i would have sacked the adviser. From the other side of this though, £10,000 is a massive amount for something that doesn’t really impact anything concrete.
    1) The Kelsalls were picking their own funds, so why did the adviser feel the need to change the benchmark anyway, it’s not as if it was his recommendations that would have looked bad?
    2) The Portfolio didn’t lose anything, for the love of god, If you made 10% and compared it to the FTSE 100 or the performance of Man United it doesn’t make any difference to the gain you’ve made.
    3) I can see the argument for saying that if the Kelsall’s had noticed that the benchmark had been changed then they would have moved adviser. What I don’t get is the massive amount paid back, are the FOS saying that because of the Benchmark changing, none of the ongoing service or advice since then deserved to be paid. More fair, would have been a simple payment for distress and refund equivalent to the time charges applied by the adviser for producing the dodgy report.
    4) Final thought, if that benchmark was so important to the Kelsall’s, why did it take them so long to notice the difference?
    I normally find myself taking the side of the complainant when it comes to the FOS and i still think they were wronged, just find the response to be completely disproportionate.

    • The question of why the benchmark was changed remains a mystery. If it was a simple mistake, it seems bizarre why Wagstaffs didn’t admit what had happened when the issue was first raised – which was well before their relationship with the client deteriorated, due to their ongoing (and increasingly desperate) attempts to cover up what had happened.

      With regard to why the changed benchmark wasn’t spotted by the Kelsalls, as I explained earlier, the figures used by Wagstaffs in all of the periodic reports presented to the Kelsall were impossible for them to check since they were portfolio growth figures. The platform company have confirmed in writing that it would not have been possible for anyone to check these figures without access to their software.

      To provide an example, the Ombudsman’s provisional decision referred to the benchmark having increased by 22.86% (without dividends) between 6th September 2011 and 22nd February 2013. Obviously, it is easy for anyone to check this, since the figures are readily available on the internet. However, the periodic reports provided to the Kelsalls by Wagstaffs show the benchmark growth rate for the period between 10th October 2011 and 21st February 2013 as 11.68%. Using the same system of calculation the Ombudsman employed in her provisional decision; the benchmark growth would have been 16.52% between these dates.

      • I think that they likely changed it to make the performance look better, i just don’t understand why. If your parents were picking their own funds, as the adviser wouldn’t it have been better for the funds to look as if they were performing poorly against the benchmark so the adviser could charge more for further advice?
        Always interesting to read the views on these sorts of things, especially from people not in the industry, although Tom, it appears that you might be involved to an extent?

        • I think you’re right about Wagstaffs changing the benchmark to make the portfolio performance look better. I can only assume they knew my parents would move their investments back to Fidelity if the Dimensional portfolio wasn’t impressing them enough, and Wagstaffs would no longer be able to charge them fees – which is, in fact, exactly what did happen in February 2015, as soon as they realised they had been misled.

          I don’t work in the financial services industry; but, like many people of their generation, my parents both struggle with the internet (and technology in general), so I needed to become an expert on this particular case to help them.

  15. It’s hard to have any sympathy for Wagstaffs Wealth Management if they’re charging a £10k annual advice fee on £1m. Quite surprised the clients were happy paying so much.

  16. Surely the only realistic benchmark is the client’s Financial Plan and their required personal rate of investment return? Even then, no guarantee it will ever be met or exceeded.

  17. As mentioned earlier, something is very fishy here. Did Mr and Mrs Kelsall lose anything? Tom Kelsall seems to protest too much. Why did FOS fine Wagstaffs £10k and where did that number come from? All pretty unsatisfactory!

    • Duncan, I can assure you that I only ‘protest too much’ because, sadly, people seem to want to continually misrepresent the facts of the case; which I find quite strange, because it’s really simple to follow the facts. Although it’s nice to be referred to in Shakespearian terms; so thanks for that.

      So there can be no confusion, in order to help bring the investigation to a conclusion, the Kelsalls asked the Ombudsman to restrict her judgement to whether they were indeed misled by the fact that Wagstaffs changed the benchmark without telling them; and then continued to present it in exactly the same way the previous benchmark over the following two year period. The Ombudsman’s report concluded that ‘the business didn’t act as it should’ and that ‘Mr and Mrs K were misled’.

      With regard to how the figure of £10,000 was arrived at by the Ombudsman, she explains in her report that it represents ‘about a year’s fees plus an allowance for interest and distress and inconvenience’, which, after having looked at the evidence, she considered was’ fair and reasonable in the circumstances’.

      The fees for the two year period in question were only partially refunded because the Ombudsman felt that the Kelsalls would have paid fees elsewhere if they had moved their investments in February 2013.

      I think that the majority of people would take the view that by far the most ‘fishy’ thing about this case is the behaviour of Wagstaffs, who lied repeatedly to try and cover up what had happened.

  18. James Marchant 3rd April 2017 at 1:26 pm

    I’m with Iain Wishart. Managing client money without some meaningful link to their goals or objectives is inviting problems.

Leave a comment


Why register with Money Marketing ?

Providing trusted insight for professional advisers. Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and thought leadership.

News & analysis delivered directly to your inbox
Register today to receive our range of news alerts including daily and weekly briefings

Money Marketing Events
Be the first to hear about our industry leading conferences, awards, roundtables and more.

Research and insight
Take part in and see the results of Money Marketing's flagship investigations into industry trends.

Have your say
Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

Register now

Having problems?

Contact us on +44 (0)20 7292 3712

Lines are open Monday to Friday 9:00am -5.00pm