FOS upholds complaint against 2Plan for tax scheme referral


The Financial Ombudsman Service has upheld a complaint against 2Plan Wealth Management for referring a client to a stamp duty tax avoidance scheme which failed.

The client took mortgage advice from 2Plan in 2013. As part of the process, he was referred by the adviser to a separate company which ran the tax avoidance scheme.

The scheme failed and HM Revenue & Customs has since been pursuing the client for the outstanding tax plus interest.

The client, described by the FOS as Mr H, paid half the amount of the tax to the company, which has since gone into administration.

Mr H complained to 2Plan, arguing the adviser actively sold the scheme to him and gave assurances about its reliability.

2Plan told the client in its final response to his complaint that the adviser had not received any commission for the referral. However, in the firm’s submission to the FOS it said the adviser had received commission.

Ombudsman Simon Pugh said the actions of the adviser “went beyond a mere referral”.

He said: “The broker introduced him to the scheme, promoted its benefits and gave him assurances about its safeguards. He told Mr H that he had referred his own children to it and said it was fool proof. This was not a simple referral; this was a sale.”

The adviser also failed to disclose the commission he received to the client.

Pugh said: “Mr H didn’t know the broker had a financial interest in him taking up the scheme and couldn’t take that into account in his decision making.”

The FOS has ordered 2Plan to pay the client £481 – the referral fee received by the adviser.

Support services firm Adviser Advocate chief executive Richard Leeson says: “There is a big difference between suggesting a client speaks to another firm and an arrangement with an incentive in the background where the customer is being told it’s the best thing since sliced bread.

“The FCA’s financial incentives guidance clearly states that firms should mitigate the risks of misselling arising from incentives.

“The important thing is that the incentive does not affect the adviser’s decision – the FOS seems to think it did in this case. But this ruling does not go as far as to say the adviser is responsible for the advice given by the tax firm.”

A spokesman for 2Plan says it does not agree with the decision, but declined to comment further.

Adviser view

Tom Kean, director, Thameside Financial Planning

While it is clear that any commission for a referral should be disclosed to the client, at what point does a glowing recommendation to a firm of accountants become a liability risk for me? We cannot be expected to double check whatever it is they recommend. Having said that, the FOS’ view that just the referral fee should be refunded to the client seems reasonable.