HL to compensate customer after three-week portfolio transfer takes seven months

In February 2018 Mr R, as he was referred to by the Financial Ombudsman Service (FOS), tried to transfer his ISA and non-ISA funds, along with some cash holdings, to Hargreaves Lansdown Asset Management.

A succession of delays followed from Mr R's initial transfer application, which meant the transfer was concluded on 3 September 2018. Mr R felt he lost out financially thanks to the delays.

During the seven-month process, some funds were encashed and the transfer of ISA and non-ISA cash concluded in May 2018. The remainder of the portfolio was transferred in specie.

Mr R's portfolio was valued at £215,000 at the outset of the transfer.

HL admitted it had not been as proactive in the transfer process as it should have been, and that it did not keep Mr R updated. For the trouble and upset caused, Hargreaves initially offered Mr R £700, which later rose to £1,000, but Mr R counter proposed a cash amount of £1,800.

In response, HL asked Mr R to itemise his alleged financial losses. Mr R set out 11 claims relating to various losses that totalled more than £30,000. Among other things, explanations for the losses included losses of income and growth from inactive cash due to the transfer delay - Mr R claimed his cash could have been transferred on 8 February - and that he had been invested in "Woodford funds", which he argued Hargreaves was responsible for recommending.

Hargreaves maintained its £1,000 compensation offer. As for Mr R's claims, the investment and platform giant said it never gave investment advice nor recommendations to Mr R.

An initial adjudicator at the ombudsman said HL's concession was sufficient and upheld the complaint. Mr R vehemently disagreed and asked for an ombudsman's decision.

When the FOS looked again at the case Hargreaves argued it was the transferor firm's decision to transfer Mr R's stock first and cash second, resulting in inactive cash.

Mr R, meanwhile, said the seven month delay was close to "the worst transfer delay he [was] aware of", and that he should be entitled to a refund of part of all the fees he paid HL during the months.

An ombudsman decided again to uphold Mr R's complaint, but this time ordered Hargreaves to compensate him further.

The FOS said HL should calculate what would have happened if Mr R's cash holdings were invested on 12 February on the basis of a benchmark comparison. It also said Hargreaves should work out the returns that would have been achieved on the cash holdings between 12 February 2018 and when each holding was eventually transferred, and that HL should pay the difference.

It added HL should pay Mr R the £1,000 for upset it previously offered.

A spokesperson for HL told PA: "We respect the decision made by the FOS and will seek to resolve matters with the client as soon as possible." 

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