The Financial Ombudsman Service has upheld a complaint against St James’s Place for giving unsuitable advice to transfer an Isa from an existing provider to SJP.
A final decision by the FOS, published last week, upheld an adjudicator decision in favour of the consumer, who complained she had lost income and capital and was disappointed with the advice she received.
It says the client approached SJP in 2011, with the aim of increasing the income she was receiving from her Isa and an investment bond. The adviser recommended the Isa be transferred from the existing provider to SJP.
The suitability letter stated the client was attracted to SJP’s approach to investment management, and noted an initial charge would be incurred as well as higher ongoing charges.
Ombudsman Doug Mansell says while the client may have been attracted to SJP’s approach to investment management, this would be a “tenuous basis” for switching provider.
He also says the risks associated with the higher charges were not made “fully obvious” to the client.
Mansell says: “I am not persuaded it was suitable advice to transfer the Isa from the existing provider to SJP.”
He adds: “It is not clear how the change of product provider would achieve the client’s key aim – to improve the income she would receive. I note the suitability letter seems to be silent on this point.”
The decision notice says SJP should pay the client the difference between the value of the current Isa and the value it would have had if it had been kept with the previous provider.
A spokeswoman for SJP says this calculation has not yet been worked out, but it believes the customer has suffered no financial loss.
The spokeswoman says: “We are disappointed the client felt let down, but we believe there has been no detriment and their Isa remains invested with us.”