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Meteor pays £20k for Lehman downgrade failure

Meteor has dropped its judicial review of a Financial Ombudsman Service decision and paid a couple £20,000 after it failed to tell them that Standard & Poor’s had downgraded Lehman Brothers.

The couple invested £20,000 in a Lehman-backed structured product, the Prima growth plan 7, through Meteor in May 2008. In February, the FOS ruled that Meteor did not treat the couple fairly because it failed to tell them that Standard & Poor’s downgraded Lehman Brothers from A+ to A in June 2008.

Meteor disputed the claim and applied for a judicial review of the FOS decision in the High Court in London. However, this week, it withdrew the case and agreed to make an ex-gratia payment to the client, despite suggesting that the FOS had decided not to contest the judicial review.

A statement from the firm reads: “As previously reported, Meteor sought a Judicial Review with regards to a final decision that the Financial Ombudsman Service had made in favour of a client holding one of our structures, for which Lehman Brothers was the counterparty.

“We are pleased to confirm that this matter has been concluded and found in Meteor’s favour. FOS accepted that their decision was open to challenge and have decided not to contest the judicial review.

“As the client had received a final decision implying that they were to receive payment, as a matter of goodwill, Meteor has made an ex-gratia payment to the client to conclude this matter.”

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Comments

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  1. Missold Investments 7th July 2011 at 12:20 pm

    The brochure for the Meteor “Prima Growth plan 7” didn’t mention Lehman Brothers, but it did promise that the counterparty would have a S&P rating of at least A+ Same with the ‘Prima 2’ and ‘Prima Plus Protected’ plans too

    It appears that Meteor chose a counterparty with a lower credit rating than advertised in the brochure. That would surely have been hard to defend.

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