An island-based Louis Group investor has been awarded compensation of £100,000 after their complaint about mis-selling was upheld.
The complaint is one of three case studies detailed in the annual report of the Financial Services Ombudsman.
Investors, many of the island-based, fear they will never see their money again when the Louis Group’s Isle of Man-based fund, promoted as ‘low risk,’ was suspended, unable to pay its multimillion-pound debts. Some £25m of their savings ‘vanished without trace’, they claim.
The Louis Group Structured Fund PLC and five related companies was wound up in the high court last year.
In 2013/14, the Financial Services Ombudsman dealt with 277 complaints, of which 119 were about life insurance, 93 about banking, 32 about general insurance and 14 about investment advice. Seven complaints were about money lenders.
Of cases that were closed, many were deemed to be outside the scope of the Ombudsman while others were resolved through mediation or with a fair offer made by the provider.
Three cases were determined by the adjudicator, including one about the mis-selling of a Louis Group product.
The complainants had invested £145,000 in a Louis Group Property Investment and Cession of Securities Agreement which had a maturity date of November 1, 2012. At the time, the complainants made it clear they required a low-risk product.
But following an investigation, the Ombudsman concluded this was a complicated and risky investment which was not in line with the complainants’ risk profile.
Moreover, it found the director of the supplier was not in a position to give independent advice as his involvement with the Louis Group created a conflict of interest.
‘The supplier knew that the investment was unregulated and unprotected by any Statutory Compensation Scheme in the event of failure, but failed to inform the complainants accordingly,’ concluded the adjudicator.
The Ombudsman concluded that the complainants were entitled to compensation for the loss of £145,000 but the amount of compensation had to be capped at £100,000 – the maximum sum which can be awarded.