Openwork must compensate a client who complained about receiving unsuitable investment advice and claimed they were misled about charges.
An Openwork adviser recommended the complainant, Mr M, transfer his existing bond and Isa to another provider with the client understanding charges for the new arrangement would be “broadly the same”.
However, when he received the first annual statement, the client was charged £2,200 for adviser fees and a £1,884 penalty for closing the bond.
The Financial Ombudsman Service decided that, while there was a lot of paperwork to read through, the network did make its charges clear.
Ombudsman Elizabeth Dawes says: “But, I accept Mr M relied on the adviser’s comment that the charges he would incur would be ‘broadly the same’. And, even though the fees were made clear in the paperwork sent to Mr M, it was Openwork’s responsibility to ensure its recommendation was suitable, taking into account the charges he would incur.”
The FOS decided the recommendation to switch providers was unsuitable, particularly because of the cost of advice and the cost of closing the bond.
It said there was little discussion about how the existing investments had performed or the anticipated performance of the recommended investments.
Dawes says: “Openwork made reference to a fact sheet which included some performance data. But, I don’t consider Openwork explained why it thought its recommendation would perform better than the existing funds.
“I take the view that Mr M would have invested differently. It is not possible to say precisely what he would have done differently. But I am satisfied that what I have set out below is fair and reasonable given Mr M’s circumstances and objectives when he invested.”
Openwork was ordered to repay the adviser fees plus 8 per cent interest per year from the date fees were paid to the settlement date and refund the exit charges plus 8 per cent interest per year from the date the bond was surrendered to the settlement date.
In addition it is to pay the client £100 for trouble and upset caused, and compare the performance of the client’s investment with a benchmark and pay the difference between fair and actual value.