Investor wins case against Ombudsman
Judge found office should have heard oral evidence
Woman wins High Court challenge to the process adopted by the Financial Services Ombudsman. Photograph: Getty Images
A woman has won her High Court challenge to the process adopted by the Financial Services Ombudsman resulting in rejection of her complaint that Goodbody Stockbrokers failed to properly inform her about a property fund in which she invested £260,000 (€329,000).
The complaint by Mary Carty-Doyle, who alleged the fund was “highly leveraged” and involved a conflict of interest for Goodbody, must now be reconsidered by the Ombudsman.
Mr Justice Daniel Herbert said it was “of the utmost importance” to stress his judgment related only to the process adopted by the Ombudsman, and he had made no findings whatsoever on the merits or otherwise of the complaint.
A core finding by the judge was, because of significant conflicts between Ms Carty-Doyle and Goodbody about what was said during discussions between them, the Ombudsman should have heard oral evidence from the sides rather than concluding he could decide the complaint on the basis of written evidence and submissions.
Property fundThe complaint arose from Ms Carty-Doyle’s investment in late 2005 in the Northern Ireland Property Fund (NIPF).
She claimed it borrowed some £222 million, either via bank loans or mezzanine finance, 500 per cent more than was envisaged, and most of this went towards residential property investments when, she claimed, she had been assured at least 70 per cent would be invested in commercial property.
Risk of lossIt was never explained to her the fund was highly leveraged, and therefore the risk of loss of capital was greatly increased, she alleged.
She also claimed a management fee of 0.5 per cent of gross assets paid quarterly in arrears created a conflict of interest for Goodbody by allegedly encouraging it to increase the gross assets through reckless borrowing to the detriment of investors.
In a detailed rejection of her complaint, Goodbody argued information documents on the fund described it as “high risk”. It said it believed it was appropriate for her to invest all her funds in the NIPF because, it alleged, she described herself to its representative as a “seasoned” and successful” investor.
Mr Justice Herbert upheld several complaints by Ms Carty-Doyle about how the Ombudsman addressed her complaint but dismissed others.