Lighthouse has been forced to pay redress on a £55,000 investment in a carbon trading partnership that was deemed unsuitable by the Financial Ombudsman Service.
A judgement published yesterday from Ombudsman Raj Varadarajan says Lighthouse had made a product recommendation and must repair the client to the state they would have been in had they not made the investment.
Lighthouse argued that the firm acted as an introducer and that it was clear the firm was not offering advice.
In addition, Lighthouse said the complaint was time barred as it was made more than six years after the alleged advice in March 2005.
The adviser involved also gave a statement claiming there was no advice given and that they suggested the client would need to speak to the carbon credit investment operator directly.
The Ombudsman dismissed the argument the complaint was time barred. It adjudged that advice had been given because the adviser compared the carbon investment to previous investments in film schemes made by the client and suggested that carbon credits investment would help provide funds to cover tax claw backs on the film partnerships.
The client made the investment using £55,000 in borrowed funds. The Ombudsman ruled that it was not suitable for the client to invest in further UCIS with borrowed funds.
It added that the investments are illiquid and that there is dispute over what the underlying investments are. It says the client’s investment does not appear to have any intrinsic value.
It has instructed Lighthouse to reimburse payments the client made to the lender of the invested money plus 8 per cent interest and clear any outstanding loan amount.