The United Kingdom's Financial Ombudsman says an adviser was right to class an investment with Kaupthing Singer and Friedlander as low risk.
The financial adviser invested in a Clerical Medical International offshore bond which was exposed to KSF before it collapsed in 2008.
After considering a complaint against the adviser, an adjudicator says leading credit rating agencies gave KSF a favourable rating until its administration, so deposits couldn't be seen as anything other than low-risk.
The adjudicator has yet to issue his final decision and will review risk warnings about protection provided by the Isle of Man's depositor compensation scheme.
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