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 Western-super-Mare, which, until January, had been FCA regulated.
According to documents seen by Financial Adviser, Blueinfinitas recommended that the client transfer his stakeholder pension worth nearly £80,000 into a self-invested personal pension (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 added he suspected 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 said.
Mr Liversidge assessed the client as having an attitude to risk of cautious-to-balanced, and as an unsophisticated investor.
He said 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”.
Mr Liversidge added he had contacted the Financial Conduct Authority about the firm but the regulator told him to contact the Financial Ombudsman Service (Fos), before adding that its enforcement and supervision departments take action whenever there is a breach of its rules.
The adviser then lodged a complaint against Blueinfinitas at 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.
Meanwhile, there have been other complaints. Last week Financial Adviser’s sister publication FTAdviser revealed that Blueinfinitas had generated more than 400 claims to the Financial Services Compensation Scheme (FSCS).
A spokeswoman for the FSCS said that to date it had paid out £1.1m in compensation on just 52 of the claims it 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, he 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 had 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 his suspicions were 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.
