The Financial Ombudsman Service has upheld a complaint involving an IFA firm failing to assess the risks associated with a self-invested personal pension.
The complainant, referred to in the decision notice as Mr G, came across a website about green oil and completed a form to reserve an investment using a Sipp. The investment firm then introduced Mr G to DeMontfort Wealth Management.
DeMontford stated it would not provide advice about the suitability of the Sipp or investments made in the Sipp, but Mr G responded he would need full advice.
However, DeMontfort said that this document was completed in error and claimed they explained the risks involved with this type of transaction, with Mr G explaining he was an experienced investor.
Mr G said he did not remember this conversation. He transferred £13,669 to the Sipp, with charges in the first year coming to £750, which represented 5.48 per cent of the total value.
Additionally, the ongoing charge of £450 represented 3.3 per cent of the fund value.
Ombudsman Roy Milne stated that it was clear from the facts the Sipp was unsuitable for Mr G and the fund value transferred was not big enough to overcome the effects of the charges without significant risk.
Additionally, he said if Mr G had received suitable advice he would not have started the Sipp.
“I think it must have been worrying for Mr G to lose all of his pension fund,” declared Mr Milne, suggesting that a payment of £300 is fair in this case.
In terms of the compensation payable by DeMontfort, he added that the intermediary must pay the difference between the fair value and the actual value of the investment, and that if the actual value is greater than the fair value, no compensation is payable.
Additionally, the firm is obliged to pay any interest.
ruth.gillbe@ft.com
