St James's Place (SJP) has been ordered to repay one of its customers more than £75,000 after a financial adviser working for the business went rogue and convinced clients to put money in a friend's company which ultimately collapsed.
According to the Sunday Times, Philip Cox, who was an adviser with SJP for a decade until May 2019, encouraged around 17 clients to invest £1.35m into Green World Innovations. The company produced cleaning products and was set up by a school friend of Cox's as well as an associate who was a former window cleaner.
One of its products included an ‘iClean system', which supposedly converted water into a sanitiser ‘stronger than bleach.' Green World went into liquidation in October 2019, leaving 68 investors - including the 17 advised by Cox - with losses of more than £3.3m.
It is understood SJP only became aware of Cox's actions when his clients, some in their eighties, complained of losses of up to six figures. They are said to have believed SJP had approved the investments because Cox used company emails and letterheads.
SJP responded to one investor, first reported in March, saying it did not accept "any responsibility in the matter".
The FCA said it would launch an investigation on the back of complaints received, while SJP said it was "extremely concerned" by the allegations and would conduct its own investigation.
Complaints were sent to the Financial Ombudsman Service (FOS), which found in favour of one of the complainants, Jon Blore, according to the Sunday Times. The ombudsman ordered SJP to refund the £75,000 he had invested, plus lost returns. SJP also had to pay £300 for "trouble and upset".
Blore, a 47-year-old musician, is the only client compensated so far. Blore was able to apply for the compensation because Cox had persuaded him to transfer out of some other SJP-approved products in order to invest in Green World, which counts as a regulated activity for which SJP is responsible.
Other investors, however, put money into Green World from their cash savings, which did not count as an activity SJP is responsible for, FOS says.
In a statement SJP said: "We have fully co-operated with the ombudsman's investigation and will not be contesting their ruling."