The FOS has upheld a complaint against a high-profile adviser over a Keydata recommendation, despite the client being an experienced Tep investor and it making up a small part of their portfolio.
A final decision by the FOS, published last week, upheld an adjudicator decision against John Joseph Financial Services for advice given in 2005 to invest £100,000 in a Keydata bond.
It ruled the Keydata secure income bond was too risky for the client, whose attitude to risk was assessed as ‘cautiously realistic’.
It found John Joseph’s financial advice “demonstrated a complete disregard for the client’s individual circumstances and interests”.
Ombudsman Roy Milne concluded while John Joseph is not responsible for the misappropriation of the Keydata funds, it “should be held to account for the poor advice it gave”.
The decision states the Keydata investment represented “a substantial proportion of the client’s pension fund”, but makes no reference to the entire portfolio.
The redress calculation has not yet been finalised, but is understood to be around £100,000 – the maximum the FOS can award for complaints referred to it before January 2012.
John Joseph managing director John Joseph, who won the Protection Review Lifetime Achievement Award in 2010, says: “We understand the Keydata investment was worth less than 10 per cent of the client’s investment portfolio, which included a substantial portfolio of second-hand endowments.
“We recognise the industry has various opinions on the suitability of Keydata products, but in this case the advice was appropriate based on the client’s overall profile.
“As a small firm we regret that we are not in a position to take the case to a judicial review.”
Highclere Financial Services partner Alan Lakey says: “It is both unfair and stupid for the FOS to look at the Keydata investment in isolation.”