Investment with Meteor Asset Management Ltd via Financial Options (Isle of Man) Ltd

roadworks9

In June 2008 I invested £100k in a Structured Product from Meteor Asset Management Ltd via my IFA Financial Options (Isle of Man) Ltd on an advisory basis & they classed me as a 'Retail Client'. The Product Terms & Conditions stated the counterparty bank would be "S&P A+ or equivalent from a similar ratings agency" (the banks name was not mentioned on any of the documents).

In late June 2008 when the contract note came through, I noticed the counterparty bank was Lehman Brothers & I visited Financial Options voicing my concerns about them; my IFA gave no advice other than verbally commenting that Lehman was a large US bank.

Lehman Brothers failed in September 2008 and over the years I received liquidation distributions, the final one being in 2019, resulting in an overall loss of £33k (or 33%) !

*However, a year after I'd bought the plan, I discovered the rating agency S&P had downgraded Lehman to S&P 'A', which was 2 weeks before I signed up to the agreement; neither Meteor nor Financial Options informed me of the downgrade at any time.

*Furthermore, my IFA Financial Options Ltd subsequently wrote to me apologizing they had sold the investment to me without a License; (these are issued by the Isle of Man Regulator, the FSA).

The result of my complaint to the UK Financial Ombudsman, was that Meteor should have informed investors of the S&P downgrade, but as it was only a slight 1 notch downgrade (and the other ratings agencies had not changed their views) clients would likely have carried on with the investment and there was no evidence in my case to suggest otherwise. The FOS stated if I was concerned about Lehman I would have enquired about selling the investment. Therefore, my complaint against Meteor (and to my knowledge all customer complaints against them) was not upheld.

The result of my complaint in the Isle of Man about Financial Options, was that the Adjudicator (John Wright) decided I was an experienced professional investor & the 'Retail Client' status which my IFA had assessed me as, was not appropriate. Mr Wright stated I was not sufficiently worried to put my concerns in writing about Lehman and the 1 notch rating downgrade was not something my IFA should necessarily have brought to my attention as it was still investment grade.

Mr Wright stated it was unfortunate that Financial Options did not have a License to sell the investment. I had not asked if they had a license & at the time it was not against the law to do so (Isle of Man legislation stating it was illegal was not brought into effect until weeks after I bought the plan, i.e 1/8/2008).   

Furthermore, Mr Wright stated for my complaint to succeed I need to show Financial Options being at least 51% or more at fault, and as I was nowhere near this threshold my complaint was dismissed. However, Mr Wright did briefly comment at the end of his report that he did not agree with the UK FOS decision, but his job was only consider the issues against Financial Options. 

Please can I have your thoughts, did the UK Financial Ombudsman and the Isle of Man Adjudicator get their decisions correct and was I treated fairly !

 



    

  



 

masonic

If it wasn't an offshore arrangement then I think you'd be on firmer ground, pardon the pun. Can't claim to have any understanding of the IoM regulatory system, but an unsuitable advice complaint against a UK adviser would be likely to succeed. What led you to use an offshore IFA in the first place?

roadworks9

Thanks for your comment 'masonic', a year earlier I'd purchased a similar investment (which I had chosen) backed by Barclays - this may have weakened my subsequent complaint against the same IFA ? The plan with Meteor was offered by Financial Options in the Isle of Man where I live. It turned out Financial Options were not licensed to sell either product.. 

Malthusian

The result of my complaint in the Isle of Man about Financial Options, was that the Adjudicator (John Wright) decided I was an experienced professional investor & the 'Retail Client' status which my IFA had assessed me as, was not appropriate.

From a UK perspective that is a very significant judgment for the Adjudicator to make. The vast majority of financial services customers are retail clients, and it would normally be up to the financial provider to prove that their customer was a "professional investor". But you haven't said anything about whether the Adjudicator was correct to classify you in that way.  

I have no experience of the Isle of Man Ombudsman, but my understanding is that, unlike with the UK FOS, the Adjudicator's decision is final, and the only right of appeal is a judicial review. Again I can't speak for the IOM, but in the UK, successfully applying for a judicial review of an Ombudsman decision is almost impossible.

My instinct is that applying to the High Court for a review of the decision is likely to be throwing good money after bad, and your losses are partly a consequence of taking advice in the IOM where there is less protection for investors than if you had taken advice in the UK. If I am wrong you will need to speak to a solicitor in the IOM.

roadworks9

Thanks you for your comment 'Malthusian', you make many good points, I have 'learned' a lot from this experience & it still troubles me today. I agree applying to the High Court is a waste of time and money, as you say there is less investors protection in the Isle of Man & you are right that the IOM Adjudicators decision is final. Its unfortunate, but i've found out the hard way !.  

masonic

roadworks9 said:

Thanks for your comment 'masonic', a year earlier I'd purchased a similar investment (which I had chosen) backed by Barclays - this may have weakened my subsequent complaint against the same IFA ? The plan with Meteor was offered by Financial Options in the Isle of Man where I live. It turned out Financial Options were not licensed to sell either product.. 

Right, then it makes sense that you used a local firm for advice. Even under the auspices of the UK FCA, we have a ridiculous rule whereby if you've entered into an restricted investment such as a P2P loan in the past, you can then "self-certify" as a sophisticated investor to lift the restrictions on future investments. I was always suspicious as to whether doing so would compromise any consumer protection and therefore never did so.