Shares/Equities Investment Decision Reference 2021-0528
| Case Outcome | Partially upheld |
| Subject Matter | Shares/Equities Investment |
| Reference | 2021-0528 |
| Date | 17 December 2021 |
| Conducts Complained Of | Encashment delays ,Complaint handling (Consumer Protection Code) , Delayed or inadequate communication, Maladministration |
| Finantial Sector | Investment |
Decision Ref:
2021-0528
Sector:
Investment
Product / Service:
Shares/Equities Investment
Conduct(s) complained of:
Encashment delays
Delayed or inadequate communication
Complaint handling (Consumer Protection Code)
Maladministration
Outcome:
Partially upheld
LEGALLY BINDING DECISION
OF THE FINANCIAL SERVICES AND PENSIONS OMBUDSMAN
The complaint concerns the Provider’s conduct in respect of the verification of the
Complainant for anti-money laundering purposes.
The Complainant is a shareholder in a sub-fund (“the Sub-Fund”) which is part of a broader
umbrella fund (“the Fund”). The Provider was appointed administrator of the Fund
pursuant to an ‘Administration Agreement’ dated 17 October 2014.
The Fund is a public limited company which was incorporated in Ireland on 23 December
2004. The Fund was authorised by the Central Bank of Ireland under the scheme for
‘Undertakings in Collective Investment in Transferrable Securities’ on 27 January 2005. The
Fund entered voluntary liquidation effective from July 2019. The Sub-Fund is one of the
Fund’s approved sub-funds.
The Complainant’s Case
In his Complaint Form, the Complainant describes his complaint, as follows:
- 2 -
/Cont’d…
“Refusing to give my own money, which is the residue of a failed and liquidated
investment fund, as contracted.
Claiming they are unable to discern who i am for AML purposes, from the adequate
documentation supplied and my even being vouched-safe for by [the Financial
Adviser], the fund creator. Clearly this level of incompetence is surely, not plausibly,
making me of the opinion that they are wilfully retaining my money. [A Provider
agent] AML ‘team leader’ at [the Provider] informed me (4/10/18) that he had
elected to pass my complaint to his management, he further informed me (10/7/18)
that they in turn had decided to ‘pass the buck’ to the none existent fund, i am only
supposing, for some guidance. Having heard no more, clearly demonstrates the
level of operating standards of this firm.”
In resolution of this complaint, the Complainant states, as follows:
“Take my money from their bank account (@3600pounds) and put it into mine as
they were contracted to do. A fair and proportionate interest payment is justified as
indeed is compensatory payment for the stress and work involved in just trying to
prize my own money from [the Provider].”
The Provider’s Case
The Provider says it was appointed as administrator to the Sub-Fund of the Fund on 17
October 2014. The Provider says it replaced another entity which previously acted as the
administrator to the Fund (“the Previous Administrator”).
The Provider says the Fund is an open-ended umbrella investment company, incorporated
in Ireland and authorised by the Central Bank of Ireland as a collective investment scheme
(UCITS). The Provider says the Complainant was a shareholder in the Sub-Fund and held
shares in Class A of the Sub-Fund. The Provider says shares of the Sub-Fund were admitted
to the Official List of the Irish Stock Exchange on or about 2 February 200 but were not
traded on a regulated market. The Provider says the Sub-Fund may invest in a variety of
financial instruments as detailed in the supplement of the Sub-Fund (“the Supplement”)
and the prospectus of the Fund (“the Prospectus”), including equity and fixed income
securities, cash and money market instruments. The Provider says forward contracts and
financial derivative instruments may be held for the purpose of reducing risks, costs or to
enhance prospective returns. In this respect, the Provider refers to pages 2/3 of the
Supplement and pages 15/21 of the Prospectus.
- 3 -
/Cont’d…
The Provider says the Fund delegated administrative services, including the payment of
redemption proceeds and anti-money laundering (“AML”) / terrorist financing due
diligence in respect of the Sub-Fund, to the Provider as its service provider. However,
under applicable laws, the Provider says the Fund retains ultimate responsibility for the
provision of administrative services including compliance with its AML obligations. The
Provider says as delegate of the Fund, the Fund retains the overall responsibility for
dealings with its shareholders.
As detailed below, the Provider says it made several attempts to contact the Complainant
in order to obtain outstanding AML documents required in order to release redemption
proceeds to the Complainant. At all times, the Provider says it acted in accordance with its
AML obligations as provided for under the Criminal Justice (Money Laundering and
the Criminal Justice (Money Laundering and Terrorist Financing) (Amendment) Act 2018
(together, the “Irish AML Legislation”). If the Provider facilitated the payment of
redemption proceeds without receipt of the requested documentation from the
Complainant, the Provider says it would have committed a criminal offence under Irish
AML Legislation.
The Provider says, as outlined below, it explored all potential avenues to resolve this issue
with the Complainant through direct communication with the Complainant where
requested and the Complainant’s financial adviser (“the Financial Adviser”), who acted as a
go-between for much of the communication between the Provider and the Complainant. It
was evident from the supporting documentation accompanying its response to this
complaint, the Provider says, that the Financial Adviser agreed with the Provider’s process
and requirements and understood the AML requirements which the Provider is required to
adhere to.
The Provider says the Board of Directors of the Sub-Fund (“the Board of Directors”)
decided to terminate the Sub-Fund on 30 December 2016 and a named firm was
appointed as liquidator (“the Liquidator”) on 9 August 2019. The Provider says the
Liquidator took operational control of the Fund’s bank accounts from the Provider and the
Provider ceased to act as administrator to the Fund. The Provider says as it is no longer the
administrator of the Fund, it is unable to take any further action in respect of the Sub-
Fund.
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