Cash Investment Decision Reference 2022-0390

• Case Outcome: Rejected
• Subject Matter: Cash Investment
• Reference: 2022-0390
• Date: 13 December 2022
• Finantial Sector: Investment
• Conducts Complained Of: Failure to provide product/service information,Early withdrawal penalty , Failure to provide accurate investment information, Failure to provide correct information

Decision Ref:

2022-0390

Sector:

Investment

Product / Service:

Cash Investment

Conduct(s) complained of:

Failure to provide product/service information

Failure to provide accurate investment information

Failure to provide correct information

Early withdrawal penalty

Outcome:

Rejected

LEGALLY BINDING DECISION OF THE FINANCIAL SERVICES AND PENSIONS OMBUDSMAN

This complaint concerns an investment plan.

The Complainant’s Case

The Complainant asserts that he approached the Provider for financial advice during the

summer of 2018 and that it prepared a financial plan document for him dated 24th July 2018.

The Complainant contends that he commenced an investment plan with the Provider in

October 2018 where he agreed to contribute €1,000 per month. The Complainant states

that he:

“…wanted to explore the option of investing in the stock market but having never

invested before, and being a completely inexperienced retail investor, I felt I needed

the assistance of a professional adviser and investment manager to facilitate this.”

The Complainant asserts that he wished to have “a sum large enough for a house purchase

in the medium term” and that he “needed an investment with flexibility on how much [he]

contributed over time”. The Complainant submits that he is employed in an industry where

“the jobs are quite transient and there is a high chance that [he] could have periods out of

work where contributions of this level would be unachievable”. The Complainant states that

the Provider recommended investment plans to him and that he:

“…was led to believe that I was taking out these products as they were appropriate

to my needs – i.e. were liquid underlying investments, allowed flexibility in

- 2 -

/Cont’d…

contribution levels without being penalised, were cost effective and I could access the

full funds if needed to without penalty.”

The Complainant submits that in early 2020, he undertook a review of his investments with

a third-party financial advisor based in London, because he has:

“… been extremely confused about my investments organised by [the Provider] and

the terms of the contracts. I felt that our “annual review” call, on 31st October 2019

which lasted no more than 10 minutes – despite me stating that I needed more clarity

on my investments, was insufficient”.

The Complainant has identified issues in relation to his investment plan with the Provider

under the headings below, which he has expanded upon in his submission:

“1. Access - I am unable to release my funds inside 10 years without suffering a large

penalty

2. Contributions - I will regardless be charged an annual admin fee of 2% of the TOTAL

10 years’ worth of premiums at a rate of EUR1k per month. This is therefore a fixed

fee of £2,400 per annum.

3. Benefits - At this point, the loyalty bonus will only serve to recoup some of the

administration fees. If I cannot continue to make the payments, for example I lose my

job, I will lose these benefits. If this happened I would also lose the enhanced

allocation rate for premiums.

4. Fees - I am also paying a 1.5% investment fee per annum based on the value of the

policy on its anniversary date which is 4th October each year.

5. Investment strategy – having now sought professional advice I understand that

my portfolio can be considered to be diversified for its current size.

6. Costs and Charges – due to the complicated nature of the different fee layers it is

difficult to see what a standard year would be. I then believe that I pay half of 0.75%

pa to [the Provider] for administering the portfolio. Again – I am still not clear on this.

7. Portfolio Performance – As at 27th February 2020, my encashment value was EUR

13,953.88 and my policy value is EUR 15,370.01. The surrender fee today is therefore

EUR 1,416.13. Again, this shows that this plan was not suitable for my needs in terms

of flexibility.

8. Funds – I am not clear who the fund managers of these funds and what their

charges are.”

The Complainant states that he made his complaint to the Provider on the 31 March 2020

and that the Final Response letter which he received from the Provider was dated 10th July

2020.