HELP NEEDED - Can't sell investments as broker is changing Custodian

davethebb

Masonic,
Thank you for your advice and I will certainly be using that. 

As you can see I am trying to find reasonable justification as to why I did not buy the funds and hold them temporarily so I was kept in the market (e.g. the expected time frame at the time was  2 weeks, although it turn out to be considerably longer). At the time I did discuss this with the investment manager whom I got on very well and he advised not doing it, but that is not documented as it was via telephone calls.

The other argument, which may work against me is that they could have sent the money they had as cash (around £200k) over. and paid the SIPP transfer costs (which they did not want to incur) instead of waiting for the remaining funds to be sold over the next 2 weeks - this would have mitigated the potential losses. However on the other hand I could have insisted they do this and paid the cost myself would be their argument.

Do you know the legal responsibilities of the advisor and investment manager after I gave them notice, for instance when I gave notice to my advisor he literally did not want to talk or communicate with me in any way nor would he give assistance or oversee the resulting multiple transfers to II - this was all left to me to arrange, etc. Are they under an obligation to ensure any transfer happens and not resist? 

Likewise with the investment manager what are their responsibilities after I informed him that I was transferring? - I know he would undertake any transactions**such that I could simply transfer my portfolio in SPECIE  ** sell the funds that II could not accept and buy ones they could under an execute-only instruction.

One other question.  At the time I had given notice to my advisor and was not allowed to communicate with him. If I wanted to go down the route of temporarily buying funds using an execute-only instruction would this have to be undertaken via one of their advisors or do you think the Investment manager would be allowed to take the instruction direct?

Sorry for all the questions but the ombudsman surprisingly has put up so many arguments in favor of the other side I need to tackle them one by one.

masonic

What do you mean by "given notice"?

davethebb

I terminated the agreement between us both e.g. he was no longer my advisor.

masonic

What happens when you seek to dissolve the contract would normally be contained within the terms of your agreement. If there was a notice period where he remained your adviser, then during that period (unless specified otherwise), he'd normally be expected to continue providing the services agreed in the contract. This may or may not have involved helping you to move your investments outside of the adviser's preferred platform. Once the agreement is terminated, it would be normal for the adviser to cease providing services to you. The adviser would normally provide information he held that you needed, but would not normally be actively involved in any process you start to transfer or transact your investments, unless this was done under cover of a further agreement, and probably for an additional fee.

Assuming the investments were held in an account in your name, the investment platform would be expected to respond and cooperate with your new platform's request to transfer the investments, sell and transfer any incompatible investments as cash, etc. You would have submitted an authority for them to do this via ii. ii would normally be responsible for managing the transfer process and working with the old platform to get everything moved across.

davethebb

The FOS has now released its final decision and it is not in my favor!!! They have said the other side is liable however they have limited this because the other side has said I failed to mitigate my losses when both I and the investment manager jointly decided that it would be too risky to temporarily reinvest temporarily in an ETF fund for 10 days and the FOS have completely ignored the fact I repeatedly requested that they make more frequent cash transfers!!!

The FOS has at the minute extended the basis of the compensation calculation from the date of the last transfer (18/1/21) to the date of the FOS decision knowing that my portfolio has not done as well as the investment manager - therefore no compensation is payable!!!!

I am at a loss now on what to do next but I would like to seek legal advice. Can anyone recommend a financial services solicitor?

masonic

Could you post the DRN reference? It may be helpful in understanding what reasonable recourse you might have against this outcome.

davethebb said:

The FOS has now released its final decision and it is not in my favor!!! They have said the other side is liable however they have limited this because the other side has said I failed to mitigate my losses when both I and the investment manager jointly decided that it would be too risky to temporarily reinvest temporarily in an ETF fund for 10 days and the FOS have completely ignored the fact I repeatedly requested that they make more frequent cash transfers!!!

So the complaint was upheld, by the sounds of it, and from what you go on to say, compensation would have been awarded to cover losses due to this liability. It is not clear from what you have written what "they have limited this" means.

When you say "both I and the investment manager jointly decided", presumably that isn't the manager of the investments you held in your SIPP. Was this your adviser, which you sacked? If they advised you not to take action to mitigate your losses, then you may have a more legitimate complaint against the adviser.

I don't think they would have been under any obligation to accept your requested solution following your rejection of the solution they proposed. Providers normally expect a cash balance to be sent right at the end of the transfer process, while investments are moved over in priority. Investing the cash and then moving in specie was a good solution to the immediate problem.

davethebb said:

The FOS has at the minute extended the basis of the compensation calculation from the date of the last transfer (18/1/21) to the date of the FOS decision knowing that my portfolio has not done as well as the investment manager - therefore no compensation is payable!!!!

Any compensation calculation would seek to put you back into the position you would have been in if the events the provider was liable for hadn't happened. It is unclear to me why a portfolio valuation between those dates would show no loss, especially if as you say your portfolio is looking even worse now than it did at some date in the past. The fact that a calculation for compensation was discussed suggests that the Ombudsman considered that there was a basis for compensation if there was a consequential loss. From what you are saying, it seems they judged that you would have lost more if you made your investments as planned, rather than having the cash stuck in your original SIPP. This could be plausible. Did your intended investment fall in value over the period of your transfer to the date you were able to make the investment?

davethebb said:

I am at a loss now on what to do next but I would like to seek legal advice. Can anyone recommend a financial services solicitor?

No, nobody here can make a recommendation. You could use the law society website, use a local firm, or get a recommendation from someone you know.

davethebb

Masonic, what is the DRN reference?
The award is limited because at the point in time "I failed to mitigate my losses" and therefore they have excluded these in the calculation. The background to this is that they had cashed in certain funds and were holding the cash until further funds etc were sold and the cash could be transferred. They rejected my suggestion of further additional cash transfers (they agreed to two additional but even these I had to fight for) they would undertake no more. Therefore so that I wasn't kept out of the market for too long I suggested that they buy an interim ETF fund - this is where the discussion occurred with the investment manager, he estimated it would be two weeks max. before the remaining funds were sold he said it was too risky (plus I would have to undertake the costs.....). Just for clarity, my advisor advised me to use a DFM and he (the DFM/investment manager) controlled to SIPP portfolio that I was transferring. I had just prior gave notice to my advisor

There was a significant gain from late October 2020 to the end of January 2021 in both portfolios but the new proposed portfolio that I had set up was performing better. However, since then, mine would have has dropped more (I have changed the portfolio since but the changes were not taken into account by the FOS), hence technically I have not suffered a loss over the longer period of time - the ombudsman clearly understood this and seems to be very biased towards the investment company.

I have until the end of the month to either accept or reject the FOS findings after which they will publish the case. I am likely to reject them.

masonic

DRN is the decision reference number assigned by the Ombudsman. It will be a while until this decision gets published anyway if it has only just been shared with you.

On the subject of limiting losses, it is not unreasonable to exclude losses suffered for the period where you and your adviser could have agreed to the ETF suggestion. You may have separate recourse against your adviser for bad advice in this regard - but your decision to end the relationship part way through the transfer does muddy these waters.

I recall your issues dragged on for about 7 weeks, so the rest of that period should be examined for the performance of cash vs your proposed investments. Performance of one set of funds vs another, and performance after the transfer completed is irrelevant, as 7 weeks is not an extraordinary timescale for an in specie SIPP transfer and whatever happened, you would not have been in the DFM portfolio after the date your transfer completed. It is right in my view that the Ombudsman didn't give any weight to your suggestion to make more frequent cash transfers, but instead sought to compensate for any loss occurring as a result of being out of the market up to the point the ETF option was proposed. By their calculation you suffered no financial loss, so it would be worthwhile examining how they arrived at that conclusion. One possibility is that the proposed new investments didn't grow over the period you were in cash (up to the date it was suggested you buy the ETF). Performance over those ~5 weeks is key.

What isn't clear is why performance after the transfer concluded is being considered. But I don't think I'm going to get a true sense of this without reading the decision when it's published. The only reason I can think of is if the basis of your complaint was that you wanted to remain in the DFM portfolio, but were forced out and moved your SIPP under protest.

While the Ombudsman could have been unfair to you, there is automatically a higher burden of proof in court, so without some compelling evidence of a quantifiable loss, it may be unwise to pursue a claim.