RegulationAug 31 2016

Adviser helps client who lost 90% of pension pot

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Adviser helps client who lost 90% of pension pot

A financial adviser is providing pro-bono help to a man who lost nine tenths of his pension savings after being recommended to invest in high-risk assets.

Neil Liversidge’s client had been contacted by a company which claimed to be working for the UK government to improve pensions.

This company then passed his details on to Blueinfinitas, a financial adviser based in Weston-super-Mare which until January had been FCA regulated.

According to documents seen by FTAdviser, Blueinfinitas recommended the client transfer his stakeholder pension worth nearly £80,000 into a Sipp and invest it across a series of holdings.

Some of his money went into blue chip equities such as Vodafone, Tesco and BAE Systems, but the majority - more than £73,000 - was invested in a range of assets Mr Liversidge described as “interesting”.

These included £19,238 in a five-year bond issued by St Lucia property developer Affinity Global Developments and another £19,355 in Goldcrest, a company looking to develop gold mines in Ghana. The largest investment of £34,465 was made into Auhua Clean Energy.

Mr Liversidge said: “Today his Sipp holds cash of some £8,000 realised from selling everything saleable.

“The Affinity Global Bond has a notional par value of £19,238 but is no longer listed. Whether it is ever redeemed at par remains to be seen.” He said he suspects it may result in a significant loss.

“Goldcrest’s shares were sold for £1,067 – a 95 per cent loss. Auhua made £2,659 – a 92 per cent loss,” he added.

Mr Liversidge assessed the client as having an attitude to risk of cautious-to-balanced, and as an unsophisticated investor.

Such an ‘asset allocation’ for such a client “defies not only comprehension, it also defies the possibility that the stock picker was the world’s unluckiest, least experienced and most stupid”, he said.

Mr Liversidge said he had contacted the FCA about the firm but the regulator told him to contact the Financial Ombudsman Service, before adding that its enforcement and supervision departments takes action whenever there is a breach of its rules.

The adviser then lodged a complaint against Blueinfinitas at the Fos.

According to the Ombudsman’s decisions database, there have been two complaints against Blueinfinitas upheld in the past three years.

Both of these involved clients being told to transfer their Sipps into high-risk investments which an ombudsman deemed unsuitable.

Other complaints have been made, however.

Last week Financial Adviser’s sister publication FTAdviser revealed Blueinfinitas had generated more than 400 claims to the Financial Services Compensation Scheme.

A spokeswoman for the FSCS said that to date it has paid out £1.1m in compensation on just 52 of the claims it has received.

Joe Sadler, an insolvency practitioner with Elwell Watchorn Saxton, which is dealing with the liquidation of Blueinfinitas, told FTAdviser there were limited assets to pay the firm’s liabilities.

Speaking to Financial Adviser said: “As regards the liquidation, we are telling people there are limited funds. We don’t even think we can afford to pay the accountants, solicitors and insolvency firm.

“I don’t think there will be a large amount of money available. This is one where the clients need to get advice from the FSCS.”

Mr Sadler added that he has been contacted by a number of people who had invested in risky assets through the company.

He said: “[Mr Liversidge’s client] isn’t the first claim of this sort we have been told about. I would say probably about 30 people have been in touch with us about this.”

Last month West Yorkshire Police said it was looking for two people in connection with an alleged scam uncovered by Mr Liversidge.

He said had his suspicions raised when he received an email from a client - a retired headteacher - requesting a transfer “to secure a vital business deal.”

The FCA declined to comment on Blueinfinitas and whether it had been reported to the regulator.

Blueinfinitas could not be reached after repeated requests for comment.