Apollo Pension & Investment Advisers has been told to compensate the widow of a client it arranged a self-invested personal pension transfer for, just three years before he died.
In 2007, Mr T was diagnosed with a degenerative neurological condition for which there was no treatment available.
By 2012, when the transfer advice was given, Mr T’s condition was rapidly declining.
Apollo recommended Mr T move his existing Sipp - worth around £315,000 - to a new Sipp with the same provider.
His original Sipp would not allow for an investment into unregulated scheme Green Oil Plantations Ltd (GOP), so the transfer was made and Mr T invested £150,000 in the oil plantations.
Mr T also invested an equal amount in another unregulated fund, but no complaint was made about that investment.
The adviser from Apollo had given him a brochure for GOP.
In 2015, Mr T complained to Apollo about the advice he’d been given, but before the adviser could reply to the complaint, he passed away.
Apollo said that it didn’t advise Mr T about the investment, stating that a separate, unregulated business had provided information about GOP and he decided to invest of his own accord.
The investment was also made through the other business, Apollo stated, noting Mr T was an experienced businessman and fully able to understand the investment implications of GOP.
But the separate unregulated business was also owned by the adviser from Apollo.
Ombudsman Keith Taylor ruled Apollo was required to know its client and give suitable advice.
“The adviser employed by Apollo recommended the Sipp and was also the agent for GOP,” he stated. “I think the adviser must have known that the investment was to be made in GOP.”
The decision notice described GOP as a high risk unregulated fund. “I don’t think Mr T should be have been categorised as experienced and sophisticated,” said Mr Taylor, noting his existing Sipp had been invested entirely into one fund for a number of years.
“His attitude to risk was recorded as highly speculative and volatile, but I’m not satisfied this was accurate, especially given how Mr T’s illness was progressing and that he wanted to provide for his wife and daughters after his death.”
Mr Taylor concluded with suitable advice Mr T would have diversified his original Sipp rather than transferred to the new one.
Mrs T has now transferred the Sipp to a different provider.
Apollo was told to compare the performance of the Sipp with that of a relevant FTSE index and pay the difference between the fair value and the actual value of the investment.
If there is a loss, Apollo should pay such amount as may be required into Mrs T’s new pension plan, allowing for any available tax relief and/or costs, to increase the pension plan value by the total amount of the compensation and any interest.
Apollo was also told to pay Mrs T £500 for the upset caused when the investment failed.
