A woman has been unsuccessful in seeking financial redress after alleging that IFA group Lighthouse Advisory Services needlessly churned her investment portfolio.
The Financial Ombudsman Service (Fos) said it would not uphold the complaint brought by the woman, who is in her late 60s.
She claimed that Lighthouse wrongly advised her to cash in two existing bonds and an Isa in favour of an offshore bond, invested in lower risk funds.
The complainant had alleged that she was wrongly advised to cancel her two existing investments and take out a similar investment. She said that she had lost £1,000 and was hit with a penalty of £1,452 for cancelling one of the old investments.
Despite acknowledging that she had been informed that the new investment was unlikely to achieve a 5 per cent return, she still proceeded with the transaction under the belief that she would receive double the income she was receiving from the previous investment.
Lighthouse responded to the complaint, explaining that the advice to invest in the offshore bond was suitable, matching the client’s objective at the time. The IFA group said that the funds were put into a cautious fund because this course of action was suited to the client’s risk profile.
The company produced a copy of the suitability letter issued at the time of the client discussion, which stated that "if withdrawals are made at a rate which exceeds the net growth of the fund, the capital value will be eroded".
The bond provider told Lighthouse Group that the value of the investment had grown since its investment in 2015, and it had effectively made a gain of £6,156 since the funds were invested.
In his decision report, Fos ombudsman Dara Islam wrote that he did not believe the advice firm was suggesting the new policy to adjust the risk of the investment, and it was simply noting that this was one of the benefits of the recommendation.
"Collectively, the recommendation was suitable," he said. "I appreciate concerns about the fees that the business has received, but I’m mindful that the fees were made reasonably clear at the outset.
"On the face of the available evidence, I’m unable to uphold this complaint."
Lighthouse Advisory Services was unavailable for comment at the time of publication.
