Close Asset Management to compensate client for unwanted ongoing advice
Client invested £25,000 through DFM service
Close Asset Management has been ordered to compensate a client who was charged an ongoing advice fee after investing through the firm's discretionary management service.
Mrs V, whose identity is confidential for privacy reasons, complained to the Financial Ombudsman Service (FOS) claiming Close charged her for an advice service she did not want or need.
In 2000, Mrs V invested £25,000 in a discretionary managed investment through Close and paid fees for the service, including an advice fee.
Close Asset Management is the parent company of investment manager and advice firm Close Brothers Asset Management.
Close wrote to the Mrs V last year to say that as it had not been able to arrange a review meeting with her over the past few years, it would assume she no longer wanted the advisory service.
She responded to confirm she did not want the service, then complained to the firm because she said she had never wanted ongoing advice.
Close explained to the ombudsman that up until the Retail Distribution Review (RDR), the advice fee was not optional so Mrs V had to pay it whether she chose to use the service or not.
Mrs V's complaint was about having to pay an advice fee from January 2013, after the changes made by the RDR had been implemented.
Close indicated to Mrs V that there was no change to the advice fee as a result of RDR, but the fact it was not optional before and was after RDR was a significant change, the ombudsman said.
The ombudsman also found no evidence that Close spelt out to Mrs V post-RDR that the advice fee was optional, as set out in the Financial Conduct Authority's guidelines.
Close was asked to repay the amount billed for the advice service from January 2013, as well as any return that would have been made if no deduction had been made.
The firm told the ombudsman it would calculate the redress by calculating the number of units deducted to pay the advice fee and credit these units to Mrs V's portfolio.
Close Asset Management declined to comment.
This article first appeared on our sister title Professional Adviser
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