The Financial Ombudsman Service (FOS) has upheld a complaint against an appointed representative (AR) of Quilter’s Wealth Management arm for providing unsuitable advice on Individual Savings Accounts (ISAs). This ruling highlights ongoing issues with Quilter’s advisory practices, adding to scrutiny of its Wealth Management division.
Details of the Complaint
In 2015, a Quilter AR advised Mr. and Mrs. S to invest £30,280 from their existing ISAs and bank deposits into new ISAs within a balanced managed fund, alongside £6,000 in cash reserves, to pay off their £120,000 mortgage within ten years. The couple began contributing £250 monthly in 2016. However, the AR later calculated that £250–£300 monthly would be insufficient, projecting a £30,000 shortfall by 2025.
The AR proposed combining investment income with mortgage payments to address the deficit but failed to provide clear projections of the shortfall. Despite suggesting review meetings in 2018, 2019, and 2021, which the couple declined, the AR did not adequately address the issue. By February 2021, the couple was advised to increase contributions to £200 monthly, which they found burdensome. Revised estimates in April 2021 indicated a need for £350–£500 monthly or an additional seven years to meet the target.
By July 2022, the ISAs were valued at £87,358, falling £32,019 short of the £119,377 needed. The FOS investigation concluded that the AR’s 2016 advice underestimated the required contributions, leading to the shortfall.
Quilter’s Defense
The Quilter AR argued that the provided figures were assumptions, not formal advice, and that Mr. and Mrs. S were advised to consult their mortgage lender. They also noted the couple’s refusal to attend review meetings and cited FCA guidance on consumer responsibility for financial decisions.
FOS Ruling
The FOS rejected Quilter’s defense, ruling that the AR’s inaccurate 2016 advice caused the financial shortfall. Had proper guidance been provided, the couple likely would have adjusted their contributions earlier, reducing or eliminating the deficit. The FOS deemed the AR’s failure to provide clear projections and follow-up as a breach of duty, dismissing claims that the couple’s spending decisions absolved the AR of liability.
The FOS ordered the Quilter AR to:
- Compensate for the lost investment growth
- Pay six years’ interest on 25% of the contribution deficit
- Provide a cash payment for distress
- Include interest on the redress from July 2022 until the payment date
The ruling was deemed “fair and reasonable” based on the evidence.
Analysis
This case likely stems from an unintentional error rather than malicious intent. However, as a regulated entity charging fees, Quilter’s Appointed Representative was responsible for ensuring the ISA contributions aligned with the couple’s mortgage goal. Quilter, as the overseeing firm, bears ultimate responsibility for its advisers’ compliance. Despite likely providing tools like forecasting calculators, the AR’s failure to identify and address the shortfall earlier led to the FOS ruling in the clients’ favor. This underscores the expectation that clients rely on advisers for accurate financial planning, not complex forecasting themselves.
Implications for Clients
Financial adviser claims vary widely, with each case evaluated on its individual merits. Clients may not always recognise grounds for a complaint, such as unsuitable advice or inadequate servicing, but should act if they suspect an issue. Those comfortable pursuing claims can start by lodging a complaint directly with Quilter or with the Financial Adviser responsible. For others lacking time or expertise, third-party firms (like HT Legal Ltd) offer no-win, no-fee representation, including escalation to the FOS and ultimately the courts if necessary.
Need Help beyond Quilter official Support?
We receive enquiries every day from customers of Quilter who want to make a complaint, however, often the complaints are not with Quilter but with third party financial advisers who have simply used Quilters platform.
As an independent firm of solictors, at HT Legal our goal is simple, to help identify if you have grounds for a complaint and if so, find the most effective route to compensation or financial redress.
Our team of financial services claims experts helps clients follow the right procedure to understand their options for pursuing the compensation they deserve — whether dealing with Quilter or any other financial advisers.
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