MET Facilities LLP · DRN-6252765

The complaint Mr P complains MET Facilities LLP (MET) is responsible for losses he has suffered from an investment he made into a bond that was arranged by one of its representatives. He says the bond was inappropriate for his circumstances and shouldn’t have been promoted to him. What happened In April 2019, Mr P invested £50,000 in an Audley Funding Bond. The bond was due to provide a return of 12% per year, with capital due to be repaid in 2022. In February 2020, he invested a further £30,000, in the same product. Mr P was first introduced to the opportunity by a third party, who explained the investment and directed him to an appointed representative (AR) of MET, Ipsum, to complete his application. Ipsum provided the on-line portal through which investors could apply to purchase the bonds and through which administrative services were managed. Mr P applied through this process for both transactions. He also declared himself as a High-Net-Worth (HNW) investor on both occasions. Initially Mr P received his interest payments but subsequently he had problems receiving the expected returns. It later became apparent the bond issuers company had run into financial difficulties and entered administration. In November 2024, the custodian holding the bond emailed Mr P to explain that his investments are now deemed to be of no value. Around the same time, a representative raised a complaint with MET on Mr P’s behalf. Further information was requested by MET to help with its investigation, but it was unable to issue its complaint response as it didn’t receive a reply from Mr P. Subsequently, Mr P’s representatives contacted this service in February 2025, to refer the complaint to us. We were able to gather the missing information MET required to answer the complaint. After passing this information on, in May 2025, MET provided its final response letter for the complaint. In summary it said: • Its AR did not make personal recommendations or have a discretionary management role, so it had no obligation to assess suitability of the investment for Mr P. • Risk warnings were given that the bond might not be liquid and investors might suffer capital losses. Mr P signed a customer classification document to confirm that he understood that his capital would be at risk if he invested. • The commission paid to the AR was not an "illegal incentive" and was clearly explained in its terms of use. • Mr P certified he was a HNW investor. • From at least 2011 to 2017, Mr P was the managing director of an FCA authorised company and was an approved person. He operated in a sophisticated regulated environment, would have understood the purpose of the certification process and would have understood the importance of completing the certification customer classification certificate honestly.

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• At the time of his first investment, Mr P also invested in another investment being secured against asset-backed loans. This is not dissimilar to the bond. Mr P retained this investment at the time of his second purchase into the bond and made further contributions into non-traditional investments. As a result, at the time of his second investment in this bond, he had sufficient experience of other products to render the investment appropriate for him. It is also arguable that he had derived sufficient knowledge from his employment to render the first bond appropriate. In March 2026, I issued a provisional decision. This is what I said “The bond Mr P invested in isn’t a mainstream product, but rather a complex instrument and the structure of the investment meant the risks were multifaceted. I haven’t found that MET’s AR, Ipsum provided Mr P with regulated investment advice, so this was not a normal advised investment and the normal rules about the suitability of advice in COBS 9 do not apply. But in arranging for Mr P to invest in the bond through its online application process, MET has accepted that due to the nature of the investment, the appropriateness rules in COBS10/10a do apply. So it is not in dispute that MET had regulatory obligations it needed to follow when dealing with Mr P. A first point to make is that appropriateness is not the same as suitability – it is not an assessment of whether the proposed investment is suitable for the investor’s objectives, attitude to risk etc. An appropriateness assessment is a determination of whether the client has the necessary experience and knowledge in order to understand the risks involved in relation to the product or service offered or demanded. There is some evidence of Ipsum carrying out an appropriateness assessment as required. I note at the time of the first sale in 2019, Mr P signed a declaration to indicate he met the criteria of a HNW investor and acknowledged he could lose assets from making investment decisions based on financial promotions and that he had read and understood the risk. He also answered a series of questions, in a section titled ‘Appropriateness Test for Complex Bond Products’. This section had six questions that required Mr P to give yes or no answers to statements including information relating to his understanding of risk, lack of guarantee, diversity risk and liquidity risk. Mr P answered these questions to indicate he did have understanding. But the questions asked were limited and, there was little information gathered to support he had existing experience, and no detail of the sorts of transactions he’d been involved with, and how often he’d traded those products. So I do have some concerns about how the assessment was carried out. At the time of the second application in 2020, Mr P again made a declaration to say he was a HNW investor. He also completed an appropriateness section, which asked him similar questions as in the previous application about his understanding of the risks. But there was a further statement which he ticked in this application that stated he was an experienced investor and sufficiently expert in dealing in equities and / or other similar instruments and understands the complexities of warrants and other complex instruments and is able to assess the risk involved in dealing with them, including volatility and the possibility of losing capital. But again, there was no information about the products he has held. I note an appropriateness assessment does not necessarily mean that only investments of a type an investor has made before are appropriate. The crux of the issue is about understanding the risks involved in the investment.

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Mr P has acknowledged he understood there was a risk, but he had been reassured by the introducer he initially dealt with, that the risks were minimal. From the evidence I’ve seen, it seems more likely than not that Mr P would have understood there were additional risks involved in investing in a non-mainstream complex bond, that the bond could not be easily sold or transferred and there was a risk to his capital.” Mr P has explained that he relied on the information from the introducer to explain various investment opportunities. He said he invested £50,000 in another product around the same time as his first contribution to the Audley Funding bond in 2019. And he went on to make further investments in 2020 and 2021 in products that were secured against asset backed loans, litigation funding and green technology. I also note he went through two applications around a year apart, and made the same declarations about his HNW status an understanding of risks on both occasions. Mr P has also confirmed that for a number of years prior to taking out the investments subject to this complaint, he was the managing director of an FCA regulated firm. Although it doesn’t appear this firm was involved in advising or arranging investments, I do think it is relevant that Mr P had experience of working at a senior level in a regulated capacity. I say this as I think it is reasonable to conclude he would have been aware of the importance of providing accurate information when making declarations in the application process for his investments. It is my view; Mr P was aware that the investment he was making was not a mainstream product. The application process indicated that there were restrictions to who could take out the investment and it was made was clear it was a complex bond. Considering Mr P’s experience as a director of a regulated firm, I think he would have been in a position to understand this information. Mr P says the introducer played down the risk, and he has explained he was provided with press releases and financial statements by the introducer to support the prospects of the investment. It is worth noting, I haven’t seen anything to suggest MET had any connection with the introducer or would have been aware of anything Mr P was told by it. Taking all of the above into account, if Ipsum had carried out a more detailed and structured assessment it is reasonable to conclude that Mr P had the necessary knowledge and experience to understand the risks involved in the investment. Based on the evidence that was collated in the applications and the further information gathered about Mr P’s circumstances both prior and at the time of investing, there is evidence he was most likely in a position to understand the risks. But that said, I haven’t seen that he did have significant investment experience in this type of instrument prior to his first investment in the Audley Funding bond. So, I this is a finely balanced consideration. I accept that it is possible that a more thorough appropriateness assessment in accordance with the rules might have concluded that the investment was not appropriate for Mr P. But even if an assessment led to such a conclusion, a firm is not obliged to prevent the client from investing. The rules permit a firm to warn a client that an investment is not appropriate for them. The client may then make a decision about whether or not to continue. And if the client decides to go ahead the firm then has to decide how to proceed. I have considered Mr P’s actions in this matter. He was introduced to the investment by a third party who he appears to have trusted and reassured by. And it appears he was seeking other investment opportunities of a similar nature around the same time and in the intervening period between his two contributions to the Audley Funding bond. As already concluded, the evidence indicates he was aware this was not a routine investment. He was

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contributing a fairly large amount of money, although I appreciate this is relative to his HNW investor declaration. In my view, the evidence here shows that Mr P was motivated to make the investment. In all the circumstances I am not able to find that it is more likely than not that Mr P would have decided not to invest in the Audley Funding bond even if Ipsum had warned him that the investment might not be appropriate for him. I’ve already indicated that I think there is persuasive argument that the bond was appropriate for him anyway. So I consider in this finely balanced situation, it wouldn’t be reasonable for Ipsum to be obliged to decide not to allow Mr P’s investment to proceed if he chose not to heed a warning that the investment was not appropriate. I haven’t seen full detail of the factors that led to the failure of the investment, but equally I haven’t seen anything to indicate that the investment must have been so fundamentally flawed in some way that it should never have been arranged. I note the bond was listed on a recognised exchange and the financial promotion it was based had the required regulatory approval. Mr P hasn’t provided any detail of specific fundamental issues that should have been discovered with reasonable due diligence. Also, apart from the investment being obviously high risk, investors did have an opportunity to carry out their own due diligence on it before investing. Mr P’s representatives responded on his behalf to say he didn’t agree with the findings, but I haven’t been provided with any further evidence to consider. MET didn’t provide anything further either. 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. As neither party has provided any further submissions for me to consider, I find no reason to depart from the findings I set out. For the reasons I set out in my provisional decision, in all the circumstances I do not consider that it is fair and reasonable to require MET to compensate Mr P for the losses he has suffered as a result of his investment in the Audley Funding bond. My final decision I do not uphold this complaint. Under the rules of the Financial Ombudsman Service, I’m required to ask Mr P to accept or reject my decision before 24 April 2026. Daniel Little Ombudsman

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