Timothy James & Partners · DRN-5924940

The complaint Mr B complains that Timothy James & Partners (‘TJP’) gave him unsuitable investment advice on a number of pensions and investments. He says the recommended investments were high risk, despite his expressed preference for low risk investments. He’s also complained there was a lack of diversification and he was not warned of the risks associated with the investments nor was he provided with timely advice to mitigate potential losses. He says he’s suffered significant losses as a result. What happened Mr B had been a client of TJP for many years and the background is well known to both parties. So rather than set out everything that happened throughout the client relationship, I’ve summarised below the points and events that are key to my decision. Mr B met with TJP in 2008. The fact find completed at that time confirmed that Mr B was 58 years old, he owned a property company, he’d consistently earnt £80,000 over the past 20 years. He didn’t have a set retirement age as he was unlikely to stop working. His house was valued at £5.5m and the net assets in his business were worth £20m. Mr B’s attitude to risk (‘ATR’) was described as 8/10. In 2009, on the advice of TJP, Mr B established a new pension plan with a firm I’ll refer to as, Firm Q. A number of existing pensions Mr B held were transferred into the Firm Q pension over the course of the next few months. A total of £285,257.18 was transferred in and was invested in line with Mr B’s established ATR. Mr B had retained one of his existing pensions, with a firm I’ll refer to as Firm F. TJP took over responsibility for managing this as part of Mr B’s portfolio. The suitability report completed in 2009 noted that Mr B saw his pension funds as a diversifier from his property portfolio as such the pension was to exclude any property. Between 2011 and 2020, TJP completed annual reviews of Mr B’s pensions. Over the course of this period Mr B’s ATR was consistently recorded as 8/10. Following each year’s annual review TJP recommended changes to the investments held within Mr B’s portfolio. Fact finds completed in 2012, 2014 and 2015 noted Mr B’s investment aims as either “growth” or “capital growth”. In 2018, TJP recommended Mr B increase his personal contributions to his Firm Q pension. It was recommended Mr B did this by directing his state pension payments to his personal pension. In 2018, TJP also recommended Mr B transfer an existing ISA he held, valued at around £12,500, to a new ISA with Firm Q for investment in the Legg Mason Japan Equity fund (ATR 8). It said this would increase Mr B’s exposure to Japan. A financial summary from July 2020 that TJP composed, notes that Mr B’s portfolio - which included the Firm Q and Firm F pensions, the Firm Q ISA, a Venture Capital Trust and a Whole of Life Plan - was valued at £620,136.96.

-- 1 of 8 --

On 14 June 2021, Mr B emailed TJP having received a statement for his Firm Q portfolio. He said the performance in comparison to his personal portfolio was shocking so he thought he should move away from TJP. TJP asked Mr B to provide some further information so it could look into the performance in more detail. It sent a further email to Mr B on 15 June 2021, this included a graph showing the performance of his portfolio during the period of time the statement related to. And it asked Mr B if he could provide further information on his personal portfolio so it could comment further. TJP says it didn’t hear back from Mr B at that time. TJP received a change of address notification from Mr B in August 2022. And around the same time, it received a letter of authority granting a new firm access to information about Mr B’s portfolio. Mr B transferred his Firm Q pension to another advisory firm in November 2022. The Firm Q ISA was transferred away from TJP in August 2023. Mr B complained to TJP in 2024. Amongst other things he complained about the substantial decline in his pension savings between September 2021 and when they were transferred away from TJP in November 2022. He said that, given the fees he’d paid for both investment advisory and fund management services, he was concerned about the significant decrease. And his lack of expertise in investment management, coupled with his age and natural inclination to avoid high-risk investments, worsened his concerns. TJP issued its final response to the complaint in October 2024. It rejected most of the concerns Mr B had raised but it acknowledged it had failed to conduct annual reviews for Mr B between July 2021 and when the pension and ISA were moved away from TJP. It offered to refund the ongoing advice charge (‘OAC’) payments taken, including interest. And it offered Mr B £200 for the distress and inconvenience caused. Mr B didn’t accept TJP’s offer so he referred the complaint to this Service for an independent review. Our Investigator’s opinion The complaint was considered by one of our Investigators. In summary they concluded that: • Mr B’s attitude to risk was established thoroughly and in accordance with the suitability regulations as established at the time. And there’s substantial contemporary evidence which supports TJP’s conclusion that Mr B was a higher risk investor who wished to pursue growth as a primary concern above all else. • Looking at the portfolio over the years, Mr B was familiar and comfortable with volatility. • Mr B wasn’t specifically unhappy with the advice provided by TJP in a broad sense. He was unhappy that such a drop in value had occurred in his pension, which up to that point, had performed well; he was specifically unhappy with the loss. • The investment in Mr B’s ISA, which contained one Japanese Equity fund, was not unsuitable because it was never intended as a standalone investment; it was always viewed as a part of the wider portfolio and to hold TJP to a different standard would not be fair in these circumstances. • The offer TJP had made with regards to the missed annual reviews in 2021, 2022 and 2023 (for the ISA only) was fair. The wider question of whether there was an

-- 2 of 8 --

unforeseen outcome from the lack of a review during 2021 to 2022 is difficult to ascertain. Mr B was essentially making a loss of opportunity argument but the Investigator couldn’t see any indication from the evidence that Mr B wished to de-risk his portfolio and prioritise capital preservation. Mr B maintains the advice he received was unsuitable so the complaint has been passed to me to reach a final decision. 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. My role is to consider the evidence presented by Mr B and TJP in order to reach an independent, fair and reasonable decision based on the facts of the case. In deciding what’s fair and reasonable, I must consider the relevant law, regulation and best industry practice. These include the overarching Principles for Businesses (‘PRIN’). Principles 1 (integrity), 2 (skill, care and diligence), 6 (customers’ interests) and 9 (reasonable care) are of particular relevance here. And I’ve taken account of the Conduct of Business Sourcebook (‘COBS’) in the regulator’s handbook, which sets out the rules regulated businesses have to follow. I’d like to assure Mr B that although I’ve only summarised his complaint and submissions above, I’ve read and considered everything he (and TJP) have said and provided. But I’m not going to comment on every point raised. Instead I’ve concentrated on what I see as the key issues which I’ve dealt with under the headings below. Having reviewed all the evidence provided, I’m in broad agreement with the investigator’s view and I agree with the outcome he reached. Mr B’s ATR Mr B doesn’t seem to dispute his initial risk profile classification of 8/10. The 2008 fact find document described this ATR as Aggressive. And having considered all the information on file, I’m satisfied that this was appropriate for Mr B in the early years of his client relationship with TJP. I say this because the evidence suggests that Mr B was willing to take a high risk in order to get a higher return. And the portfolio TJP managed represented a small proportion of Mr B’s overall wealth. So I think he could tolerate any potential losses. Mr B owned a property company, valued at around £20m in 2009, and I think it’s fair to say that he most likely understood the relationship between risk and reward. However, I do appreciate he wasn’t an expert in investments but the information on file supports that he wasn’t a novice either. Mr B took a keen interest in where to invest, often having considerable input into investment decisions. A letter issued by TJP in January 2011 following a meeting with Mr B, confirmed that: “You are interested in investing in funds that look to return 20-30% per annum rather than those that return single digit increases. l did flag that we are looking at investing over a further 14 years before you look to draw your tax free cash and we need to look at ensuring you avoid large downward swings in the value of your pension fund. You brought to the meeting articles from your newspaper which highlighted potential future growth would be driven from the Far East and the BRIC economies (Brazil, Russia, lndia and China). l flagged that currently 40% of your investments are currently invested in the Asian Pacific region, which is a high concentration of your pension portfolio... … When we originally spoke on the telephone you requested a recommendation for Brazil. As you did not wish to proceed with my original recommendation attention

-- 3 of 8 --

turned to the BRIC economies which l had originally ruled out as only approximately 28% of the fund is invested in Brazil via the Allianz BRIC fund as opposed to 68% via my lnvesco Perpetual fund recommendation. As you wanted a recommendation for this geographical region l recommended the Allianz BRIC fund which provides exposure to Brazil, Russia, lndia and China although it can also invest up to one third of the funds assets outside of the BRIC economies including developed economies or other emerging markets. l flagged that this fund along with my previous recommendation invested in commodities, the building blocks of the global economy, which can be prone to wide swings in price…” Mr B’s ATR was consistently recorded as 8/10 throughout his client relationship with TJP. This was either described as “Aggressive” or “Adventurous” over the years. A pension report issued by TJP in 2014 noted that: “You have indicated that you want to take an adventurous attitude to risk with your investments. This means, on a scale of 1 — 10 where 1 is low and 10 high investments would be at 8. You would like to take advantage of some equity exposure with the prospect for good long-term returns and can accept the increased short-term volatility. Finametrica is a new tool Timothy James and Partners are using to give a clear indication of clients tolerance to risk and neither of you wished to complete the questionnaire. The investment risk you are both electing is in line with your historical investment risk rating, which has not altered.” A fact find completed in 2017, noted Mr B’s financial priorities for the next year, 5 years and 10 years as “growth, tax mitigation and IHT planning”. And it confirmed he was unlikely to stop working. It noted that Mr B had a precautionary heart stent fitted in 2015 and he was in good health. So overall I don’t think Mr B’s initial ATR rating of 8/10 was unsuitable. Mr B was an experienced and successful businessman. I consider it very likely he understood that this level ATR was one that involved significant risk. I think Mr B understood risk and was prepared to accept the risk of capital loss in exchange for the potential for investment return. The evidence indicates that he was prepared to invest on a ‘Aggressive’ risk basis to provide the potential for capital growth in the value of his portfolio. And I’ve not seen that there were any significant changes in Mr B’s circumstances in the run up to 2020 that would have altered this position. However, central to Mr B’s complaint is that, from 2020, TJP relied on an outdated ATR profile for him, which was incompatible with his age, declining health, retirement status and need for capital preservation. And Mr B has said that by failing to update his risk profile as he turned 70 (in 2020), TJP has breached COBS 9A. In July 2020, COBS 9A.2.1 R stated: “When providing investment advice or portfolio management a firm must: 1. obtain the necessary information regarding the client’s: (a) knowledge and experience in the investment field relevant to the specific type of financial instrument, insurance-based investment product or service; (b) financial situation including his ability to bear losses; and

-- 4 of 8 --

(c) investment objectives including his risk tolerance, so as to comply with (2); 2. only recommend investment services, financial instruments and insurance- based investment products, as applicable, or take decisions to trade, which are suitable for the client and, in particular, in accordance with the client’s risk tolerance and ability to bear losses” Having considered all the information on file regarding the 2020 annual review, I’m satisfied TJP complied with the above rule. It obtained updated information about Mr B’s financial situation and investment objectives when it completed a fact find document, which was subsequently sent to Mr B, following the annual review meeting. This fact find document repeated the note about the heart stent in 2015 and confirmed that Mr B had diabetes, but this was noted as low risk. It also said Mr B was still unlikely to stop working. Mr B’s financial priorities for the next year, 5 years and 10 years were again noted as “capital growth, tax mitigation and IHT planning”, as well as “long term capital growth for family, note that previous non domicile status has enabled offshore capital to accumulate upon which we do not advise…” It was noted that Mr B intended to defer taking his pension until age 75 at which point he’d take his tax free cash. And it stated that his ATR hadn’t changed since his last meeting and he didn’t wish to complete an up to date Finametrica report. Mr B’s ATR was recorded as 8/10 and it was noted that he wanted “more exposure to technology/overseas and less to old economy such as motors”. Overall, there’s no evidence of a material change in Mr B’s circumstances, objectives or risk appetite in the July 2020 review meeting that persuades me he wanted to adopt a more cautious approach to the investment of his portfolio compared to that taken in the preceding years. And the documentation suggests Mr B declined to update his ATR or go through a Finametrica report. While Mr B complains his ATR was not compatible with his age, declining health, retirement status and need for capital preservation, I’ve seen no evidence to support any significant changes in his circumstances. On the contrary, the evidence suggest that Mr B intended to continue working and was not looking to access his pension until age 75 – so not for another five years. And even then he only intended to take his tax free cash and leave the remainder of his pension untouched. It doesn’t appear he ever intended to use his pensions to provide an income in retirement; it was recorded in several documents over the years that Mr B’s income, should he stop working, would come from his properties. And his pensions seem to have been used as a way of reducing any potential inheritance tax liability rather than funding for his retirement. So overall, the evidence I’ve seen suggests that Mr B was happy with his ATR classification of 8/10 and despite the firm asking, he didn’t want to complete a Finametrica report to have this reassessed. And I don’t think there were any significant changes in Mr B’s circumstances that I think ought to have caused TJP to have been concerned that his previous 8/10 risk classification was no longer appropriate. As I’ve said above, Mr B was still working, there hadn’t been any significant change in his health that he made TJP aware of. The portfolio managed by TJP continued to represent only a fairly small proportion of Mr B’s overall wealth, which the information on file suggests had increased since he was first a client of TJP, and he wasn’t reliant on the pension to provide an income if, and when, he did eventually stop working. While I appreciate Mr B believes he should have been advised to take less of a risk because of his age, I don’t think TJP’s continued classification of his risk profile was unsuitable for

-- 5 of 8 --

him, based on what it understood of his circumstances. And I’m conscious Mr B had declined the option of having this updated in any event. I would also add that the evidence on file suggests that Mr B still had strong views on where he wanted to invest at this time. For example, in 2019 the notes suggest he had requested more exposure to China. And as can be seen from the above notes, in 2020, he requested more exposure to technology/overseas. I know TJP wasn’t there to just facilitate what Mr B wanted, it needed to weigh up Mr B’s objectives with what it considered suitable. But even if I thought TJP ought to have been concerned about Mr B’s ATR classification in the 2020 annual review, I think the evidence suggests that Mr B would have wanted to maintain a higher risk strategy at that time in any event. I am also satisfied that TJP made the implications of this high risk approach clear at numerous times throughout its relationship with Mr B, and that Mr B would therefore have understood the risk to his capital associated with it. Suitability of the ISA investment & asset mix of the portfolio Mr B was an advisory customer of TJP, not a discretionary customer. This means that TJP made recommendations and Mr B decided whether to follow its advice. The responsibility to choose to invest therefore remained with Mr B. That said, TJP had a responsibility to gather enough information to assess Mr B’s attitude to risk and circumstances and provide suitable recommendations. Mr B has complained that it was unsuitable for his ISA to have been invested solely in one high risk fund – the Legg Mason Japan Equity fund (ATR 8). But like our Investigator explained, the ISA was being advised on as part of the overall portfolio. So it shouldn’t be considered in isolation. TJP had to make sure the investments within the portfolio achieved an overall balance suited to Mr B's attitude to risk. And it’s clear that the investment decisions TJP made took account of the entire portfolio. Various changes were made to the investments held across Mr B’s portfolio over the years that TJP advised Mr B. Having carefully considered the funds TJP recommended, I am satisfied that they were consistent with a high risk investment approach. They did have a significant level of associated risk, but this was in line with the level of risk Mr B was prepared to tolerate, and they were not in my view unsuitable for his circumstances. He was able to withstand any potential losses and was investing for growth over the longer term. Mr B has complained that there was an excessive concentration in Asian and BRIC markets but I can see that the decision to increase his exposure to these regions was initiated by Mr B. As set out above, Mr B did his own research and bought articles to his annual reviews. In 2011, to meet Mr B’s objective of investing in these regions, TJP recommended switching £10,000 to the Allianz BRIC fund, which had a risk rating of 9/10. And switching £20,000 to the Newton Asian income fund which had a risk rating of 7/10. Overall, I’m satisfied that TJP, while taking account of Mr B’s objectives to invest in these regions, also tried to ensure his portfolio remained balanced and in line with his ATR. And I’ve seen no evidence that any of the funds TJP recommended unbalanced Mr B’s portfolio to the extent that the overall risk-profile of the assets held no longer met his requirements. Fees Mr B has complained about the fees charged by TJP for managing his investments. The fees taken after July 2020, when TJP failed to carry out its annual reviews, are dealt with separately under the next section. So what I’ve considered here are the fees Mr B paid to

-- 6 of 8 --

TJP between 2009 and 2020. There are various documents on file which show that Mr B was made aware of, and agreed to, the fees he was paying TJP. For example the 2018, annual review letter said: “Our charges in respect of the investments I have advised for you will remain the same in line with our tiered charging structured, as detailed in our Client Service & Fee Agreement, which was signed in our meeting. Timothy James & Partners charge an initial adviser fee of 3%. Our ongoing fee of 0.85% per annum is based upon the value of your investments, which is calculated net of the initial fee taken. The amount received will depend upon the value of the fund so if the value of the fund increases, the monetary value of the 0.85% per annum will also increase accordingly” Mr B doesn’t seem to dispute being aware of the fees, instead it seems he’s unhappy because he believes he didn’t receive the service he was paying for. However, I’m satisfied TJP provided the service Mr B paid it for. His portfolio was reviewed annually in line with what had been agreed with Mr B. As I’ve explained above, TJP was providing an advisory service; it wasn’t providing a discretionary service so it wasn’t required to monitor Mr B’s portfolio on an ongoing basis. Missed annual reviews The last annual review TJP completed on Mr B’s portfolio was in July 2020, when it recommended a couple of fund switches within Mr B’s portfolio. TJP accepts that it failed to carry out a review in July 2021 and again in July 2022. But Mr B’s complaint isn’t that the reviews were simply missed; he’s complained about losses suffered as a result of these reviews being missed. He says his portfolio continued to be invested in high risk funds which were not suitable for him, given his age, declining health and retirement plans. I do appreciate that Mr B is disappointed by the performance of his portfolio, particular between 2021 and 2022 but I won’t be asking TJP to reimburse any losses his portfolio suffered. As the Investigator explained, the drop in value of Mr B’s portfolio didn’t occur as a result of any failings by TJP; it was an in-built characteristic of the aggressive portfolio, which for the reasons I’ve explained, was not unsuitable for him, given his objectives and capacity for loss. And generally, it’s not unreasonable advice to remain invested throughout turbulent times, so just because the markets may have been volatile (e.g. due to Covid) doesn’t mean TJP would’ve suggested changes to Mr B’s portfolio. I would also add that even if TJP had reached out to Mr B to offer him annual reviews after 2020, I think it’s more likely than not that Mr B wouldn’t have met with TJP. I say this because not long before the July 2021 review was due, Mr B emailed TJP. As set out in the background section above, he expressed shock at the performance of his portfolio in comparison to his personal portfolio. And he said he thought he should move away from TJP. So by the time the July 2021 annual review was due, Mr B was already unhappy with TJP. So that TJP could look into Mr B’s portfolio, it emailed him twice to request further information. But Mr B didn’t respond. And despite being unhappy with how his funds were performing, Mr B didn’t get back in contact with TJP and instead arranged to transfer management of his portfolio to another firm. On balance, I think if TJP had reached out to Mr B to conduct the annual reviews in 2021 and 2022 (and 2023 for the ISA), I think it’s likely that Mr B would have declined these in any event. TJP has offered to refund the OACs taken for the missed annual reviews including an amount for interest. It said this had been calculated in accordance with the regulator’s guidance. I think this offer is fair. But as far as I’m aware, this payment hasn’t been made to

-- 7 of 8 --

Mr B yet. So on receipt of confirmation that Mr B accepts this final decision, TJP should arrange to bring the missed OAC payments up to date by adding 8% simple interest to each payment, from the date the payment was taken to the date of settlement. TJP also offered Mr B £200 for the distress and inconvenience caused as a result of missing the annual reviews. I think this is fair in the circumstances. Conclusion I appreciate Mr B feels strongly about this matter so I am sorry to disappoint him. But having considered all the information on file, I not upholding his concerns about the suitability of his portfolio. I’m satisfied that given his ATR, capacity for loss and overall circumstances, that it was suitable for him. And I’m satisfied his portfolio was invested broadly in line with his Adventurous/Aggressive ATR. In terms of the fees he paid to TJP, I think these were made clear to him and I think he received the Service he paid for up to July 2020. I think TJP’s offer to refund the OAC payments that were taken after the July 2020 annual review with 8% simple interest is fair, subject to interest on the OAC payments being bought up to the date of settlement. My final decision For the reasons explained, I partially uphold this complaint. Timothy James & Partners Limited has already made an offer to refund the OAC payments for the missed annual reviews. This amount should be bought up to date using 8% simple interest from the date the OACs were taken to the date of settlement. Under the rules of the Financial Ombudsman Service, I’m required to ask Mr B to accept or reject my decision before 24 April 2026. Lorna Goulding Ombudsman

-- 8 of 8 --