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FOS publishes case studies on client risk attitude


The Financial Ombudsman has published a series of investment complaint case studies which centre around disputes about clients’ attitude to risk at the point of sale.

The FOS says it continues to see a significant number of complaints where investments were recommended that carried an inappropriate level of risk for the consumer. It has published the case studies to demonstrate its approach to judging these complaints and how it calculates redress.

The FOS explains why it upheld certain complaints. In one case, a financial adviser recommended a couple invest the bulk of their £75,000 investment in stock market funds, with the remainder in gilts. They told the adviser they wanted to take a small amount of risk but wanted returns to supplement their income. The FOS judged the adviser should have explained the couple needed to take more risk to achieve their objectives, and that the adviser was not justified in putting the bulk of the investment in shares.

In another case, a bank adviser recommended a retired couple to cash in one of their with-profits bonds and invest £20,000 in a property fund. The bank could not explain why it made the recommendation.

Yellowtail Financial Planning managing director Dennis Hall says: “This all comes down to record keeping. Where firms were able to demonstrate what was said and how risk was determined, the complaints were rejected.”


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There are 5 comments at the moment, we would love to hear your opinion too.

  1. incompetent regulators award team 18th July 2013 at 10:47 am

    When you have a risk averse group of people getting paid on targeted completions, unqualified, sitting in judgement and a barrage of fraudulent claims……….BINGO we have wrong decisions being made!

  2. I did not enjoy my holiday abroad last year. I wanted a holiday in the sun. The travel agent sent me to a place which I deemed too hot. I do not like foreign food but that was all I could find. Every other person spoke in a language which I did not understand. To cap it all, I was stung by a jellyfish & something I drank left me with a headache. I wish I could take my complaint to FOS instead of ABTA.

  3. The problem is nobody in the industry measures risk in the same way, yet we class funds in the same class.

    Simple solution: The FCA should produce a standardised ATR calculator for use in UK financial services. End of. (Of course they could be liable later by claims companies 🙂 So of course they won’t)

  4. I agree with anon at 11.43 but until the FCA or someone agree a risk scale,for me the only option as Dennis Hall says is RECORD keeping, For us that is not just all hard and soft facts, Key Features and reports, but a scanned copy of anything written down and an ml3 or wave.dkc recording of all phone calls and client meetings. At ,east that way we should only be hung draw. and quartered for what was said incorrectly rather than any accusation of an intent to stitch up!

  5. I think protection from complaints is 2 fold.

    Firstly, and most importantly in my opinion IFA’s have to be honest with clients about potential returns. If you explain the risks of an investment and a client looks uncomfortable then don’t try to push them. I’ve always taken the approach that clients need to decide themselves that they want an investments after listening to all the options.

    Secondly, as Phil Castle pointed out, record absolutely everything in all cases and if the case is out side the norm document even more.

    Just my humble opinion as always.

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