Invest Protect Insure Financial Advice Ltd · DRN-6210187

The complaint The estate of Mr A complains that Invest Protect Insure Financial Advice Ltd (IPI) failed to provide him with an ongoing service of his investments. What happened Mr A was a client of an advice firm I’ll refer to as Firm C until October 2021. I’ll refer to Mr A’s adviser at Firm C as Mr H. Mr A held several financial products whilst he was a client of Firm C, including: • Aviva investment bonds • Prudential investment bond • Embark General Investment Account (GIA) In April 2020 Mr A agreed to a fee and service agreement with Firm C regarding his Prudential and Embark plans in which he agreed to pay Firm C an ongoing service fee of 1% of the funds each year. An ongoing commission payment was also being paid from Aviva to Firm C. IPI say that in late 2021 Mr H was retiring and had arranged for his clients to move to IPI. IPI say it wrote to Mr A in February 2022, introducing itself as Mr A’s new adviser. IPI say the servicing of the Aviva and Prudential plans were transferred to it in early 2022 and the Embark plan was transferred on 7 July 2022. On 15 May 2023 Mr A wrote to IPI. He said IPI hadn’t contacted him when his Prudential and Embark policies were transferred from his previous adviser. He said he hadn’t received any service or meetings from IPI to discuss his finances. He asked that IPI refund the fees it received from his investments. IPI responded to Mr A’s letter. It said the transfer of business had been communicated to Mr A and it completed in July 2022 when the Embark policy transferred over to it. IPI said it was contacted by Mr H earlier that year to say that he was the attorney under Mr A’s registered Lasting Power of Attorney (LPA). It says that Mr H told it that Mr A was unwell, so he should not be contacted until future notice. It went on to say it later tried to contact Mr H for an update on Mr A’s health, but he had been difficult to get hold of. Mr A complained to IPI in June 2023. He said he hadn’t received any earlier correspondence from IPI. He’d received a letter from Mr H when he retired to say IPI would be in touch, but he hadn’t had any contact. Mr A said Mr H was not his attorney and there was no attorney registered on any of his investments, so he could not see why IPI had been speaking with Mr H and not him. He said it was a breach of data under GDPR to have discussed things with Mr H. Mr A said Embark had confirmed IPI became the servicing agent of his plan in September 2021, but fees weren’t charged until July 2022. He said he hadn’t authorised IPI to take any fees. Mr A said he understood IPI had also accepted fees from Prudential, but he hadn’t signed an agreement for these fees to be taken.

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Mr A finished by saying that he’d not received any correspondence from IPI to advise him on the service offered; level of costs; or frequency of payments for the ongoing services. Nor did it advise him when it would be in touch to arrange an annual review. In July 2023 IPI responded to Mr A’s complaint. It said it had sent Mr A an introductory letter in February 2022 explaining the transfer of business and it provided a copy of the fees it had received. It reiterated that Mr H had told it he was Mr A’s attorney, so it had acted on his instructions not to contact Mr A. It went on to say it wasn’t an authorised firm until November 2021 so couldn’t have serviced the Embark plan from September 2021 as suggested. It said the plan was only transferred in July 2022 and provided a copy of a letter from Embark to Mr A outlining the charges. IPI went on to quote its letter from February 2022 setting out the details of the transfer. It said a review was due to take place in July 2023 and said it would have reached out to Mr H again, but it received notification that Mr A’s business had been transferred away to a new adviser before the review became due. Mr A wasn’t happy with IPI’s response to his complaint and so, he brought his complaint to our service where an investigator considered the circumstances but was unable to give a view that was agreed by both parties. Prior to an ombudsman’s decision being reached on the complaint Mr A sadly passed away. Mr A’s estate has now continued this complaint on Mr A’s behalf, and it’s been passed to me for a decision. I sent both sides a provisional decision on this complaint. I’ve copied my findings from it below. My provisional decision In my provisional decision I said: I’ve considered all the available evidence and arguments to decide what’s fair and reasonable in the circumstances of this complaint. When considering what is fair and reasonable, I take into account relevant laws and regulations as well as the regulator’s rules, guidance and standards. Where appropriate I also consider what was good industry practice at the time of the advice. The regulator, the Financial Conduct Authority (FCA) sets out various rules and guidance in its handbook. Of relevance to this complaint are: Principle 6 – A firm must pay due regard to the interest of its customers and treat them fairly. Principle 7 – A firm must pay due regard to the information needs of its clients, and communicate information to them in a way which is clear, fair and not misleading. COBS 6 – Information about the firm, its services and renumeration. COBS 8 – Client agreements In February 2017 the FCA issued a supervision review report entitled ‘Acquiring clients from other firms’. Of relevance to this complaint the report said: Client agreements We also found that firms did not always recognise where the contract between the original firm and the client did not allow ongoing services provided and charged for to be transferred to the acquiring firm.

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Acquiring firms must obtain the client’s agreement before providing and charging for their services. Firms should comply with the requirements of COBS 8.1.3R and the adviser charging disclosure rules in COBS 6.1A. These Handbook rules include the requirement on firms to disclose the total adviser charges payable and the services to be provided for those charges. Additionally, firms must ensure they comply with their legal obligations under the contract and relevant unfair terms legislation. During our review we discovered firms had acquired client banks in circumstances where the original client agreement to provide and charge for ongoing services was no longer valid for any services offered by the new firm. This was because the original agreement was between only the outgoing firm and the client and so the new firm was not party to it. Where a new agreement was required, firms did not always ensure they had the client’s agreement before arranging for facilitated adviser charges to be redirected to their own bank accounts. Some firms planned to have a meeting with their new clients soon after the acquisition to offer a new client agreement. However we found examples where the new client agreement had not been entered into before services were provided to the client or before adviser charges were transferred to the new firm. This approach made us consider whether a firm had complied with the requirement to have a client’s consent before actually providing those services. Many of the acquiring firms assessed wrote to clients to inform them that the services provided and charges would stay the same as their previous advisers’, without giving any further details. In these instances, firms appeared to believe that they could rely on the disclosure provided by the original firm without attempting to meet the requirements placed on them by the adviser charge disclosure rules. We did see instances of new clients receiving some information in the days after the acquisition which also asked them to contact the firm if they did not wish to proceed with the service. However the information was often not detailed enough to meet the adviser charge requirements. For example, the information provided did not include details of the services the firm intended to provide, the specific monetary amount of the ongoing charge to the client and, where applicable, how this charge may change if it was calculated as a percentage of invested assets. … Ongoing adviser charges can only be received by a firm that is providing a proactive ongoing service to a client. This means that, where a firm is aware that the ongoing service is not, or cannot, be provided to an individual client, it should ensure that the ongoing charges are stopped and, where appropriate, refunds made. Where possible, the firm should let the client know when it plans to take any of these actions. Where evidence is incomplete, inconclusive or contradictory, I reach my conclusions on the balance of probabilities – that is, what I think is more likely than not to have happened based on the available evidence and the wider surrounding circumstances. Mr A said he didn’t receive the communication IPI say it sent in February 2022. While I don’t doubt Mr A’s testimony, the letter appears to be correctly addressed and more often than not post arrives at its intended destination, so I’m minded to say that on balance, the letter was received by Mr A. Although I accept, he may not have read it. I’ve gone on to consider whether the letter IPI sent Mr A in February 2022 met the FCA’s rules and guidance relating to the disclosure of fees. But I don’t think it did. I’ll explain why. The relevant part of the letter IPI sent Mr A says:

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Please be assured that there will be no change to your provider contracts, agreed adviser fees, charges or terms and conditions. I will contact you again at the time of your next review to provide an update on your plans but in the meantime should you have any queries please do not hesitate to contact me… In its letter IPI failed to meet the requirements placed on it by the adviser charge disclosure rules found in COBS 6. I say that because it didn’t disclose what the adviser charge was or what ongoing services it would provide in return for the charge. And it didn’t tell Mr A he had the right to cancel the charge. Instead, IPI relied on the disclosure made by Firm C without meeting the adviser charge rules, which is what the FCA specifically warned against in its guidance above. Furthermore, I don’t think IPI had the authority to automatically take on the adviser charges from Firm C without any discussion and agreement from Mr A. I say that because IPI sent a copy of Mr A’s fee agreement with Firm C. It made no mention that Mr A’s agreement for ongoing advice charges to be paid from his funds could be transferred to a different adviser without prior agreement. So, as the FCA had warned above, I don’t think Mr A’s client agreement with Firm C was valid any longer for any services offered by IPI. Therefore, without prior consent from Mr A, I don’t think IPI had the required agreement in place to accept ongoing advice charges from Mr A’s providers. So, it shouldn’t have done so. I’ve considered IPI’s testimony that Mr H, acting as Mr A’s attorney, asked for him not to be contacted. But I have concerns about the process IPI followed. I’ll explain why. IPI say Mr H gave it the LPA document and a letter to confirm it had been registered. But the document IPI supplied isn’t the LPA. IPI have provided a covering letter from the Office of Public Guardian to acknowledge that the LPA had been registered. It also said it enclosed a formal notice that the LPA had been registered. The letter explained that the original LPA had been sent to a solicitor’s firm and that ‘only the original LPA or a certified copy can be used to make legally binding decisions on behalf of the donor’. The document IPI say is the LPA is in fact the formal notice that the LPA had been registered, not the LPA itself. That’s important because the LPA explains the circumstances under which an attorney could make decisions on Mr A’s behalf. If Mr A still had the mental capacity to make his own decisions, Mr H could only start making decisions on his behalf if the LPA expressly said he could, and Mr A gave Mr H permission to do so. Mr H could only act without Mr A’s permission if he lacked the mental capacity to make his own decisions. I’ve seen no evidence that was the case and IPI later communicated directly with Mr A for his complaint, indicating to me that he still had the mental capacity to deal with IPI himself. IPI could only accept Mr H’s instructions if Mr A lacked mental capacity or the LPA allowed him to with Mr A’s permission. But instead of establishing whether Mr A had mental capacity or had given Mr H permission, IPI took Mr H’s word on the matter. In doing so, IPI failed to act in Mr A’s best interests. But even If I’m wrong, and IPI could accept instructions from Mr H under the LPA, it didn’t ask Mr H to agree to a new client agreement on Mr A’s behalf which would have allowed it to accept adviser charges. Instead, it simply accepted that Mr A was uncontactable. However, the FCA’s guidance is clear. It says, ‘where a firm is aware that the ongoing service is not, or cannot, be provided to an individual client, it should ensure that the ongoing charges are stopped and, where appropriate, refunds made.’ So, I’m satisfied IPI ought to have refunded any fees taken when it decided that it was unable to provide the service to Mr A due to his health. Overall, I’m satisfied IPI didn’t have the required agreement from Mr A to accept the ongoing advice charges from his Prudential and Embark plans. But even if it did, it ought to have

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been clear to IPI from its interactions with Mr H that it was unable to provide the service to Mr A, so it should have stopped and refunded them. For these reasons, I’m minded to uphold the complaint and direct IPI to refund the fees it accepted from the Prudential and Embark plans. The Aviva bond I note that in Mr A’s original complaint to IPI he didn’t complain about any charges on the Aviva bond. That might be because he knew he wasn’t paying an ongoing advice charge on it. The bond Mr A held with Aviva was different to the Embark and Prudential plans. Aviva have confirmed that only commission was being paid on this bond. It’s explained that the commission was paid by Aviva and wasn’t from any deduction of units from Mr A’s plan. So, it wasn’t at a cost to Mr A and didn’t cause him a loss when it was paid. The rules around re-registering of commission are also different to the transfer of clients paying an ongoing advice charge and while I could consider IPI’s actions here, even if it made an error, I’m satisfied it hasn’t caused a financial loss to Mr A. So, I don’t intend on considering this further. The responses to my provisional decision The estate of Mr A accepted my provisional decision. IPI didn’t accept my provisional decision. It provided a copy of the LPA for Mr A. It said the documentation clearly demonstrates that a valid LPA was in place at the time and it had acted appropriately in verifying it. IPI said it confirms that, following instructions from the attorney, it was asked not to contact Mr A. So, it would not have been appropriate for it to approach him directly. It went on to say if there were later disputes, those matters would relate to the actions of the attorney and not IPI’s conduct in adhering to the authority provided. What I’ve decided – and why I’ve considered all the available evidence and arguments to decide what’s fair and reasonable in the circumstances of this complaint. I’ve also re-considered the findings I made in my provisional decision. Having done so, I haven’t changed my mind from the conclusions I reached in my provisional decision which forms part of this final decision. I’ll explain why. I recognise that IPI have now sent a copy of the LPA that it hadn’t provided previously. But the copy of the LPA only serves to corroborate my earlier findings. I say that because the LPA clearly states, with its own emphasis in bold: When do you want attorneys to be able to make decisions? As soon as my LPA has been registered (and also when I don’t have mental capacity) Most people choose this option because it is the most practical. While you still have capacity, your attorneys can only act with your consent. If you later lose capacity, they can continue to act on your behalf for all decisions covered by this LPA.

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As I said in my provisional decision, I’ve seen no evidence that Mr A lacked mental capacity at the time. Nor have I seen any evidence that Mr A had consented to Mr H acting as his attorney prior to losing any capacity. IPI say it acted correctly in verifying the LPA, but I disagree. It needed to establish whether Mr H was acting with Mr A’s consent or if not, that Mr A didn’t have the capacity to make his own decisions. I’ve seen no evidence that it did. But, even if Mr H was acting as Mr A’s attorney and he had the power to do so, IPI still didn’t seek consent from that attorney to pay ongoing advice charges to IPI or to sign a new client agreement on Mr A’s behalf. When IPI eventually spoke to Mr A, it was clear he didn’t want IPI’s ongoing services. So, at no point did IPI have the required client agreement in place with Mr A, or his attorney, to accept ongoing advice charges in return for an ongoing service. Despite that, IPI had been receiving charges deducted from Mr A’s plans since 2022. Therefore, it’s unreasonable for IPI to now retain those fees and it should return them to Mr A with missing investment returns added. Putting things right As I’ve concluded IPI didn’t have the required agreement with Mr A to pay it the ongoing advice charges it accepted, fair and reasonable redress would be to put the estate of Mr A into the position it would have been in had no fees been paid to IPI from Mr A’s Embark and Prudential plans. The estate of Mr A has also lost investment returns from those fees, so IPI must also compensate him for the lost investment returns as I’ll set out below. To put things right IPI must: • Refund all the ongoing advice fees IPI received from the Embark and Prudential plans. • Calculate and pay returns on each of the fee amounts from the date each fee was taken from the plans to the date of my final decision. • The lost return on the fees should be calculated in line with a benchmark – the FTSE UK Private Investors Income Total Return Index. I’ve chosen this method because the FTSE UK Private Investors Income Total Return Index is made up of a range of indices with different asset classes, mainly UK equities and government bonds. It’s a reasonable proxy for the type of return that could have been achieved over the period in question. The compensation must be paid to the estate of Mr A within 28 days of the date IPI receives notification of the estate of Mr A’s acceptance of the final decision. Interest must be added to the compensation amount at the rate of 8% per year simple from the date of my decision to the date of settlement if the compensation isn’t paid within 28 days. My final decision My final decision is that I uphold this complaint and direct Invest Protect Insure Financial Advice Ltd to pay compensation as I’ve set out above. Under the rules of the Financial Ombudsman Service, I’m required to ask the estate of Mr A to accept or reject my decision before 10 April 2026.

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Timothy Wilkes Ombudsman

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