Rapport Financial Strategists Limited · DRN-6246981

The complaint Mr S complains that Rapport Financial Strategists Limited (Rapport) provided him with a poor service in regard to his investments and pension arrangements. Specifically, he was unhappy with the fees charged, a lack of transparency and he didn’t receive the service he paid for. Mr S complained alongside Mrs S, her complaint is being dealt with under a separate reference but as the complaints are the same, reference to her is also included in this decision. What happened I set out the background to this complaint and my provisional findings in my provisional decision. This is shown below and forms part of this decision: Mr and Mrs S were clients of Rapport since May 2013. On 20 February 2014 a client agreement was signed. This did not include a fee agreement but referred to a costs document provided separately. ‘The key facts about our services and costs’ document of April 2014 set out the charges that would apply. 3% initial charge for pensions and investments and an ongoing advisor charge which was 0.25% for an annual review, 0.35% for half yearly reviews and 0.5% for quarterly reviews.’ This was not signed or accepted by Mr and Mrs S. On 22 May 2015 Mr and Mrs S were recommended Isas and investment accounts. They signed a fee agreement which confirmed they would be charged 2% of the first £15,000 invested, 1.75% of the next £35,000 and 1.5% of the next £25,000 initial charge for pensions and investments. And an ongoing fee of 0.5% of the value of the investments. On 4 June 2015 Mr and Mrs S were sent a suitability letter following their meeting. The letter confirmed the ongoing remuneration of 0.5%. The suitability letter confirmed Mr and Mrs S were provided with an enclosure setting out the fees. It said the following: “Paying by Fee (Ongoing) These fees reflect the ongoing service that we provide to you such as the monitoring of your investments over time to ensure that they continue to meet your needs. This service will include an annual reappraisal of your attitude to investment risk. We will also review the allocation of assets within your investment based on the service options you select as outlined below. Rapport will actively contact you to undertake the review as stated above and the frequency of this contact will be dependent on the choice you make below. Quarterly 0.50% per annum of the value of your investments Half-yearly 0.35% per annum of the value of your investments Annually 0.25% per annum of the value of your investments

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In cash terms if your investment has a value of £10,000 the costs will be £50 for quarterly review, £35 for half-yearly review and £25 for annual review. The above fees are payable either by invoice or by adviser charge deducted from the product. If you wish to cancel the ongoing fees and no longer wish to continue with our services you will be required to notify Rapport in writing giving a minimum of one month’s notice and including your reasons for cancellation.” On 27 April 2018 a fact find was completed however there is no evidence a meeting took place. On 26 March 2019 a fact find was completed. Mr and Mrs S were sent a letter following their review meeting. They were charged an initial fee of £1,200 (3% each) for financial advice for their Isas and the letter confirmed this along with the ongoing remuneration of 0.5%. Mr and Mrs S were provided with an invoice and paid the £3,000 with a cheque. In November 2019, there was a change and a new advisor met with Mr and Mrs S and followed this up with a detailed email on 25 November 2019: ‘In line with our Terms of Business we charge an ongoing adviser fee of 1% per annum which can be facilitated by your investments. As your new adviser I will need you to confirm that you are happy for fees to be deducted in the same way as previously and I will email you over a new Charging Agreement in relation to the Zurich Investments’. Mr and Mrs S did not sign to agree to this. On 9 March 2020 a fact find was completed and on 10 March 2020 the advisor’s notes show he met with Mr and Mrs S over Skype and had a further telephone call with Mr S in April 2020. On 6 October 2020 a fact find was completed. On 30 March 2021 the advisor emailed Mr and Mrs S to arrange a review meeting. On 22 April 2021 Mrs S emailed back: ‘Have been thinking about this for a while but have decided that we no longer want to proceed with Rapport as our financial advisers. We will look for more local advice to review specific issue, using this as and when we needed’. In September 2022, Rapport invited Mr and Mrs S for an annual review. In response, Mrs S responded “In terms of going forward, we have had a lot of changes with our finances, working and pension intentions. The upshot is that we no longer have much cash/ISA reserves as the majority of our savings has been left as equity in our old house. This has also impacted Mr S’s intention to take his pension money starting at age 55 in which case there may be little sense in moving pension pots around. So in terms of our financial advice requirements, beyond advice for my pension there is very little scope for you to cover your costs of advice through ISAs or Mr S's pensions.” On 16 July 2024 a fact find was completed. On 23 July 2024 the advisor sent a detailed email to Mr and Mrs S with a summary of their meeting including current situation, objectives and future plans.

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On 2 August 2024 Rapport confirmed the ongoing advisor charge had been switched off as per Mr and Mrs S’s request. On 22 October 2024 the advisor confirmed to Mr and Mrs S that as they had not signed the updated client fee agreement the fees had remained at the original rate in line with the agreement signed in 2015. Rapport also confirmed the ongoing advisor charge had been switched off within 24 hours of the request in August 2024. Mr and Mrs S complained to Rapport on 24 October 2024. Rapport rejected the complaint and so the complaint as referred to this service. Our investigator looked into matters and set out her final recommendation (initially her conclusions were different but new evidence was provided that changed matters), the key conclusions she reached were: • Mr S’ pensions were not being managed by Rapport, there was no evidence to support that this was the case. • We couldn’t consider any missed reviews prior to October 2018 under our rules as Mr S ought to have known the reviews were missed more than three years before he complained due to the information he was provided at outset. But any reviews after this point could be considered as it was less than six years after the complaint had been made. • Whilst the fee charged for the advice regarding the ISA’s in 2019 wasn’t the agreement originally signed four years earlier, the suitability report and invoice had set out the fee and Mr and Mrs S paid for it by cheque – so knew the fee and agreed to it. • With regards to the missed reviews the investigator concluded that reviews hadn’t taken place in 2022 and 2023 and should be refunded. In response to the view, Rapport said it didn’t agree the review in 2022 hadn’t taken place but it was happy to pay the redress for the 2023 meeting and the distress and inconvenience. It said the adviser had confirmed that the 2022 meeting had taken place. And provided his testimony. He said in 2022 a meeting took place over the phone in January (and another in August) but he had no evidence of the January meeting due to an email server change. They were able to provide analysis documents stamped from the time it was said the meeting took place. The investigator said she wasn’t convinced by the evidence because the documents don’t show that a review took place and she would have expected a written follow up if held over the phone. With regards to the August meeting where there was more evidence of a meeting taking place, the investigator said this was about a dispute with his neighbours and withdrawal requests not an annual review. Mr and Mrs S said there were some points they didn’t agree with and said they intended to respond but have since not added anything further. They had previously accepted the investigator’s view on the overcharging and the pension aspect of the complaint. What I’ve provisionally 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. And having done so, I agree with the outcome reached and for broadly the same reasons as the investigator.

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At this stage it seems the only matter in dispute is the 2022 review. And so my findings will concentrate on that. But to be clear, I have considered the other aspects of the complaint but I agree that we can only consider reviews from late 2018 onwards, that Rapport wasn’t responsible for the performance or management of his pension arrangements and the ISA fee was fairly set out and agreed to in 2019. The investigator’s position was that the review in 2022 didn’t take place and should be refunded alongside the 2023 fee. Unlike other years there is no documentation confirming the review took place but in response to the investigator’s view, Rapport provided the adviser’s testimony that a review took place in January over the phone but the follow up email wasn’t available due to a server change. Evidence was also provided of a print out showing Mr and Mrs S’s ISA holdings and performance for a years period ending in January 2022. Rapport feels strongly that therefore the review did take place and there is some evidence that suggests it might have done. So I have to consider the evidence to decide what likely happened on the balance of probabilities. In questioning the review occurring we are not calling the adviser a liar as Rapport suggests, I accept the review could have happened but its also possible it did not or that what occurred did not meet the requirements for a review. So I will be led by the evidence to decide what I think is more likely. The evidence we do have is the testimony from the adviser that he did a review over the phone in January. This testimony is from four years after the event, and Mr and Mrs S won’t have been the advisers only clients. I think it’s very unlikely he has drawn this conclusion purely from memory – this likely wasn’t a memorable event. I think its more likely he’s come to this conclusion from the evidence he’s retained which I’ll come to shortly. In terms of the recollection alone of the meeting, I also note that previously the information we were given about when all the reviews had taken place by Rapport in conjunction with the adviser (before the focus was on 2022) – was that it had happened in August. The evidence provided since shows that meeting in my view wasn’t a review but in reaction to Mr and Mrs S’s needs around there changing circumstances. I also note the adviser says with regards to the August meeting: Yet in relation to the January meeting (which was now said to be the annual review – which wasn’t previously mentioned in the overall timeline of the reviews across the years) the below was said: Unlike the August 22 meeting, the adviser doesn’t offer to get the call log. He also says he remembers doing the August meeting but the same confidence doesn’t appear to be there for the Jan 22 meeting. There is no other evidence the meeting took place or offer to find further evidence. I also think this would have been a strange time to carry out an annual review, given two months earlier Mrs S had said: To update you we are currently exploring a new relationship with another financial adviser, & will advise when this has been entered into. In the interim could we please have an up to date valuation for my & Mr S’s Isa's current value.

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This was in response to the adviser’s email saying the costs would have to go up if they were to continue working together and asking them to sign a new agreement – which wasn’t signed. Furthermore, the majority of annual review invites and the reviews that were carried out were in late March not January. The analysis documents referred to above, provided an up to date valuation of both Mr and Mrs S’s ISA’s and there doesn’t seem to have been any contact prior to this after Mrs S’s request. So I think there is a good chance that the analysis documents were produced in relation to this request rather than an annual review. And perhaps the adviser’s belief a review took place is founded on the timing of the analysis documents rather than actually remembering the review. In conclusion, I can’t be certain what happened, it’s possible a review did take place but the evidence suggests on the balance of probabilities it did not. And therefore, I do think a refund should be provided for the 2022 review and the 2023 reviews that didn’t occur. The 2023 review has already been accepted as refundable by Rapport, by this point Mr and Mrs had declined two years of reviews. As no review had taken place for some time and at the time there was no requirement from the customers for ongoing advice, this fee should be refunded as agreed. For the avoidance of doubt with regards to the other annual reviews, I agree with the findings of the investigator. The investigator concluded Mr S should be awarded £200 for the distress and inconvenience caused by knowing he’d paid for these reviews that didn’t occur, Rapport has agreed to this and I think the figure recommended is fair and reasonable and in line with our award guidelines. Mr S responded to say he agreed with the decision, Rapport made no further comment. 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. And having done so, I see no reason to depart from the findings set out above. Putting things right It looks like the intended date of the annual review was the end of March from the invites sent and reviews carried out, for ease I’ll take the date to be 1 April. We have established two years’ worth of review fees need to be refunded, the review due in 2022 and the review in 2023. Rapport should therefore repay the ongoing advice charges, adjusted for the growth they would have experienced (being invested in the same fund(s), for: • The fees taken between 1 April 2022, until 1 April 2024. I understand that Mr S and Mrs S’s relationship with Rapport came to an end around August 2024. It appears Mrs S remained in the same investments and so potentially the calculation can be run to the settlement date. However, it appears Mr S sold down his investments. So in the situation where it isn’t possible to run the calculation to the settlement date because the investment ceased or was amended post disengagement, the loss should be calculated at the date of disengagement and brought up to date using an appropriate benchmark index.

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This is to account for the growth Mr and Mrs S could have achieved on the loss established at an earlier date until the date of settlement. The benchmark I think would be most suitable considering Mr and Mrs S’s attitude to risk is The Average rate from fixed rate bonds. To arrive at the fair value when using the fixed rate bonds as the benchmark, Rapport should use the monthly average rate for one-year fixed- rate bonds as published by the Bank of England. The rate for each month is that shown as at the end of the previous month. Rapport should apply those rates to the loss established on an annually compounded basis. Why is this remedy suitable? I’ve chosen this method of compensation because: • Mr S wanted to achieve a return without risking his capital. • The average rate for the fixed rate bonds would be a fair measure given Mr S's circumstances and objectives. It doesn’t mean that Mr S would have invested only in a fixed rate bond. It’s the sort of investment return a consumer could have obtained with little risk to their capital. Rapport should pay into Mr S’s policy, to increase its value by the amount of the compensation. If Rapport is unable to pay the compensation into an existing plan it should pay that amount direct to Mr S. Rapport should also pay Mr S £200 for the distress and inconvenience caused. Rapport should provide Mr S with its loss calculations in a clear and understandable format. My final decision For the reasons explained, I require Rapport Financial Strategists Limited to put things right as set out above. Under the rules of the Financial Ombudsman Service, I’m required to ask Mr S to accept or reject my decision before 27 April 2026. Simon Hollingshead Ombudsman

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