Mr M took his complaint to the Financial Ombudsman Service after being mis-sold high-risk and illiquid investments which were unsuitable for his circumstances.
What did Mr M invest in?
+ −Mr M invested £20,000 in each of The Audley Funding Bond, Panacea Ventures Limited Bond, and Bentley Global Bond. London Stone Securities Ltd, an independent stockbroker, arranged the investments for him in 2018.
All three bonds were considered to be “non-readily realisable securities” and deemed high risk by City Watchdog, the Financial Conduct Authority (FCA). Many people are attracted to such investments as they promise high rates of return.
As part of the application process, Mr M claims he was asked to sign a significant number of documents, one of which classed him as a “sophisticated high net worth investor”, which he was not. He also claimed that, if the high level of risk these particular investments carried had been clearly explained to him, he would have chosen not to invest.
The investments lost money, and Mr M was not happy with the service he received from London Stone Securities. He complained to the Financial Ombudsman Service (FOS). FOS is an independent body that aims to settle disputes between financial businesses and their clients.
FOS investigation
+ −In response to Mr M’s complaint, London Stone Securities initially denied any involvement in Mr M’s bond investments. It later admitted that its involvement in the Panacea and Bentley Global bond transactions was on an ‘execution-only’ basis, for which it charged a 1% fee and did not provide Mr M with any financial advice.
The FOS investigator looked at emails and letters between Mr M and London Stone Securities, as well as correspondence Mr M received from Panacea Ventures and concluded that London Stone Securities likely arranged all three investments.
It appears that the paperwork and money intended for Panacea Ventures may have been lost and did not reach the company straight away. In 2020, London Stone Securities accepted its involvement in the sale of the Panacea Bond to Mr M and offered him a £10,000 by way of a goodwill gesture.
A FOS Ombudsman was asked to make a final decision on the case. They concluded that London Stone Securities had a key role in Mr M’s investment in the relevant bonds. All three investments were unregulated and illiquid (non-tradeable) mini-bonds, not suitable for the majority of retail investors, which he was. The FCA banned the sale of mini-bonds to ordinary investors like Mr M in 2020, after a series of failed bond schemes left investors out of pocket.
As the investments were inappropriate for Mr M’s investment needs, who had specifically indicated that he didn’t want to put his money at significant risk, the Ombudsman ordered London Stone Securities to pay fair compensation based on a calculation for each mini-bond compared to a benchmark fund. The aim was to put him back in a similar financial position to what he would have been in had he not invested through London Stone Securities. In addition, he was awarded £500 for the distress and inconvenience caused.
TLW Solicitors are investment mis-selling specialists
+ −If you were given financial advice to invest in an unregulated investment scheme with claims that promised excellent returns, please speak to us. Sarah Spruce, Legal Director, who heads up the claims team, says:
“Your financial adviser has a duty to check that investments are sound and suitable for your needs. Mini bonds were deemed to be too high risk for the average investor and that is why the FCA stepped in to ban their sale. Even companies who claim not to have provided financial advice have responsibilities to their clients. The rules are complex, but we can help you navigate the process of making a no win, no fee claim. Get in touch with my specialist team to see if you may have grounds for a claim.”
If you or someone you know has lost out financially as a result of unsuitable advice, we may be able to recover those losses.
Please call us on 0800 169 5925, email us, or use the call-back form below, and our team will contact you for an initial, no-obligation consultation. We work on a ‘no-win, no-fee’ basis, so you have nothing to lose.
It is important to get advice as soon as possible as strict time limits can apply.
Minimum case values apply.
Meet Our Team
Meet Sarah, who heads up our experienced Investment Claims team.
Sarah and her colleagues are on hand to help with your claim.
