An ombudsman has issued a scathing criticism of a financial advice firm which helped a client invest his entire pension into Harlequin property.
The client - referred to as Mr G - complained about the advice he had been given by Allan McRoberts, trading as AM Wealth Management Services, which led to his £48,000 pension being valued at £1.
AM Wealth Management Services claimed it was being “scapegoated” because it had only advised on whether Mr G should transfer his pension into a Sipp - not on whether that Sipp would be invested into Harlequin.
This, AM Wealth Management Services claimed, was the responsibility of an unregulated advisor or agent who had referred Mr G to them.
But ombudsman Benjamin Taylor said: “I understand that AM feels it has been made a ‘scapegoat’ and that the agent has walked away from this complaint without any liability whatsoever.
“The comparison between AM and the agent though isn’t a fair one. The agent isn’t a regulated adviser. We have no jurisdiction over it.
“It is hugely significant that AM is. It brings a privilege to advise on pension transfers and gives responsibilities, duties and protections towards clients which an unregulated adviser doesn’t have. AM had a regulated duty to give suitable advice but didn’t.
“The argument that Mr G would have simply gone elsewhere and still have invested is misplaced. I don’t accept that Mr G would either have still have invested, or gone to a different adviser for a different answer.
“If AM had given suitable advice it wouldn’t be dealing with this complaint. It’s as simple as that.”
Mr Taylor pointed out that the property was high risk, highly illiquid, highly geared and speculative but Mr G transferred his entire pension provision.
He also said there was no evidence Mr G had any experience of property investments like Harlequin and his fact find recorded he had limited capacity for loss.
In addition AM claimed Mr G had a “high” attitude to risk despite no attitute to risk questionnaire having been completed and it being unclear how the firm reached this conclusion.
Mr Taylor said: “COBS 2.1.1R required AM to act ‘honestly, fairly and professionally in accordance with the best interests of its client’.
“This is an independent duty on the firm. It can’t simply say that the customer had already decided what he wanted to do, so it simply carried out his wishes regardless of whether it was in Mr G’s best interests.
“I understand the agent used to be a regulated advisor, but was no longer authorised. That’s why Mr G would have been referred to AM. I think AM knew this.
“This wasn’t the only time AM had been referred clients who wanted to invest in Harlequin by the same agent. AM couldn’t reasonably rely on Mr G being advised in this unregulated manner. It had an independent duty to give suitable advice.”
Mr Taylor told AM to obtain the notional transfer value of Mr G’s previous pension plan if it had not been transferred and pay an amount into his Sipp so that its value is equal to this notional transfer value.
AM has also been told to pay a commercial value to buy Mr G’s share in the Harlequin property and pay five years’ worth of future fees owed by Mr G to the Sipp.
It has also been told to pay Mr G £300 for the trouble and upset caused.
