A new client was poorly advised in 2014 by a discretionary FCA authorised fund management company. The client invested in the fund management company’s leveraged, concentrated, small company fund. Your client complained to the Financial Ombudsman Service (FOS) after having lost £400,000 on a total investment of £500,000. The fund management company offered no compensation. The FOS offered your client the statutory maximum award and made a recommendation that the fund management company pay the remainder between the statutory maximum and the total level of compensation calculated by the FOS that in this instance is £400,000. Your client believes that he has the following three options:

1. a)  Accept the FOS award of £150,000 and close the case.

2. b)  Reject the FOS award and take the company to court to claim the full£400,000.

3. c)  Accept the FOS award of £150,000 and take the company to court to claim the difference between the FOS’s statutory maximum award and the FOS’s recommended compensation of £400,000.

Your client asks you if he is correct about the options he believes are available today, the risks involved, and the payouts. Based on the legal provisions available in the UK, discuss the implication and feasibility of the options.

Answer rating: 100% (QA)

Answer The options which are believed to be available to the client along with the risk involved and its payout are as follows a To shut the case by accepting the award of 150000 as fixed by the FOS T... View the full answer