Barry was advised to move £150,000 to a new fund and stick with it. Then his adviser said it was winding down and he'd probably lose money.
What happened
Barry had been investing through the same adviser for 15 years. In one of their monthly meetings, the adviser recommended that Barry move some money from his ‘wealth preservation’ fund into a new ‘wealth generation’ fund.
Barry transferred £150,000 to the new fund, which included a small amount in unregulated collective investment schemes (UCIS).
After a year, Barry began to have concerns. In their next few meetings, the adviser repeatedly reassured Barry that he should remain in the fund. The adviser said that investments tend to fluctuate, and it was nothing to worry about.
However, some months later, the adviser told Barry that the fund managers had decided to “wind down” the fund and he would likely lose some money.
Barry said the adviser shouldn’t have put him off taking back his money earlier. He was also unhappy with the advice he had been given to invest in the UCIS in the first place.
He complained to the adviser who said the fund had been suitable and that he wasn’t responsible for the loss, as Barry had known the risks involved. Barry disagreed and asked us to look into his complaint.
What we said
We needed to understand whether Barry's advice about investing in the UCIS had been suitable for his circumstances and attitude to risk. From the adviser’s records, we saw that Barry’s attitude to risk had been recorded as ‘high’.
Under the relevant rules, he fell within the ‘high-net-worth individuals’ category. This meant he was eligible to have UCIS ‘promoted’ to him. And looking at Barry’s history, it appeared that he had invested in other UCIS in the past.
The adviser sent us the documents that Barry had been given about the fund. These clearly mentioned the risks involved. We also saw from the adviser’s records that he and Barry had discussed the risks in a face-to-face meeting. We thought it was likely that Barry was aware of the risks involved in the investment.
We asked the adviser why he’d thought Barry should stay in the fund. He told us he recommended customers with long-term investment strategies, like Barry, keep the investment going because performance would likely improve.
He also sent us a breakdown of the fund's performance since Barry had first invested. This showed that, with some fluctuations, the fund had continued to increase in value. The fund also made up only 3% of Barry's overall investment portfolio.
Given this, we didn’t think the adviser's recommendation to stay in the fund was unreasonable. We didn’t uphold Barry’s complaint.