Pensions  

Sipp firm cleared over £98k property losses as advice cited

Hornbuckle Mitchell has been cleared by the pensions ombudsman over alleged failure to conduct adequate due diligence on esoteric property investments placed in a self-invested personal pension, as the client received advice from a regulated IFA.

Roger Rundle had complained to the pensions ombudsman alleging that Hornbuckle Mitchell, which acted as administrator and co-trustee with its subsidiary Hornbuckle Mitchell Trustees, did not undertake adequate checks in relation to shares purchased in Dubai property developer Dubailand Development Ltd and a loan made to Bentley Leek Properties Ltd.

Dubailand Development was an unregulated “high risk” overseas properties development management by a Mauritian company “promising high returns”. Bentley Leek Properties was set up by IFA Bentley Leek Financial Management, which was the clients IFA at the time, to enable their clients to invest in “an additional class”.

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Bentley Leek entered administration in September 2011 and went into liquidation in November 2011, leaving “little prospect of any recovery of investor funds in relation to both investments” according to the ombudsman decision. The FSCS announced in June of this year that the firm has been declared in default and that it will begin processing claims from investors.

Mr Rundle complained that Hornbuckle did not disclose conflict of interests and that it did not take adequate steps to ensure the investments complied with HM Revenue and Customs requirements and, in particular, whether it was “prudent, secure and commercial”.

Mr Rundle alleged that if Hornbuckle had acted properly he would not have lost about £98,000 in his Sipp when the investments failed.

Jane Irvine, deputy pensions ombudsman, did not uphold the complaint. She said that by signing the Sipp application form in April 2007, Mr Rundle had declared that he fully understood and agreed that they would not provide him with personal financial advice and did not have a duty to ensure suitability of the chosen investments for his Sipp.

She also added that Mr Rundle’s investments in Dubailand Development and Bentley Leek Properties were made after he had received and accepted advice from regulated IFA firm Bentley Leek Financial Management Ltd.

Ms Irvine also said that at the time of his investments, in 2007, the Financial Services Authority was applying “a relatively light touch” to regulating Sipps.

She added that the investment acceptance criteria upon which Mr Rundle is relying to substantiate his allegations that Hornbuckle breached their obligations to investigate and monitor his Sipp investments were only introduced in August 2011and could not therefore have had any influence on his investment decisions.

The Pensions Ombudsman also rejected a similar complaint against Hornbuckle in October 2012.