She applied through Selftrade for Royal Mail shares via her Isa and Dealing Accounts and received the scaled down allocation of £750. Selftrade then decided to split the allocation pro rata, between the two accounts, without consulting her. She complained to Selftrade and asked that the holding be recombined.
"I have been told 'do not sweat the small stuff', but I don't take that view," she says. "I can see that Selftrade have made a decision on my funds that improves their position to extract fees, using the argument that it would cost them effort and resources to reverse the split. Surely they only have to roll back that decision. I believe it to be a matter of principle that brokers should not be allowed to make decisions about a client's holdings that benefit themselves while disadvantaging the client."
Selftrade's email response to her complaint was: "After careful consideration, management made the business decision to book the orders in this manner in order to minimise any potential tax implications for our underlying customers. HMRC regulations do not allow for shares to be transferred into an Isa. In order to move your holding in Royal Mail Group from your dealing account to your Isa, you would be required to sell from the dealing and rebuy within the Isa."
When the IC asked Selftrade to investigate the case, a spokesperson replied: "Given the unprecedented demand for Royal Mail shares and the following scale back, Selftrade, in line with all other share-dealing services, had to make adjustments to the allocations of each applicant. Mrs O'Hara-Boyce originally placed two orders with us, through two separate accounts, which we applied to the scaled back offer as per her original instructions. We are sorry to hear that Mrs O'Hara-Boyce is not happy with the allocation."
In all cases, where a customer of a stockbroker or other financial services firm is not happy with the outcome of a complaint, you have recourse to the Financial Ombudsman Service. This is a free service to consumers set up by parliament to sort out individual complaints that consumers and financial businesses aren't able to resolve themselves.
If the ombudsman's final decision is in favour of the consumer - and the consumer accepts the decision before the deadline given to them - the decision becomes legally binding. This applies to both the business that the consumer has complained about and the consumer themselves.
But if the ombudsman's final decision does not find in favour of the consumer, the consumer is not required to accept it and it does not become binding. The consumer is free to go to court instead (depending on any court requirements or restrictions - for example, on time limits).
Unfortunately, it seems customers of stockbrokers have had little success with having their complaints upheld by the ombudsman. Case histories are publicly available to view on the Ombudsman's website. However, from 1 April 2012 until today, there have been no complaints upheld related to investment and pensions products when sold by stockbrokers.
The best outcome for unhappy clients of stockbrokers seems to be a small goodwill payment of between £50 and £100.
For example, an investor complained that Barclays Stockbrokers did not remove a certain stock from his stock-broking account, even though it had no value. The Ombudsman accepted Barclays' position that they were unable to simply remove the line of stock until they had official notification that enabled them to do so. However, the Ombudsman endorsed Barclays offer to make a payment of £100 to the investor in recognition that the business could have been more helpful.
In a second example, representatives of the late Mr B complained that Natwest Stockbrokers took an unnecessary 21 days to transfer stockholdings from his estate. While the Ombudsman did not uphold the complaint, it did endorse Natwest payment of £50 compensation as "fair and reasonable" in recognition that "the estate of the late Mr B will have suffered inconvenience as a result of the delay".
In both these cases, customer service was lacking. But it seems that bad customer service will not lead to your complaint being upheld. Your best recourse is to push for small amounts of compensation from the broker and/or tell the IC about your experience.
