Education for the masses

It all stems from a Financial Ombudsman Service complaint by a man who took out a self-invested personal pension and invested it in assets that were unusual, to put it mildly.

Wayne Charlton lost part of his pension to unregulated investment Sustainable AgroEnergy, which had promised returns of between 8 and 9 per cent and purported to provide agricultural land leases in Cambodia, where they would grow jatropha trees for biofuel.

In short, the Fos found in favour of Mr Charlton and Berkeley Burke took the matter to court, where judges agreed with the ombudsman. An appeal against this decision has now been withdrawn after the Sipp provider’s administrators acknowledged there was no funding for the legal battle.

This means the previous ruling stands, and Sipp providers must now carry out adviser-style due diligence. It also means advisers should have a look at any Sipp advice they gave before 2014, to prevent complaints on the back of what is effectively a new precedent – particularly if they advised on setting up the Sipp but not on the investment.

So how have we ended up here? Quite simply because of a lack of education.

Ultimately, advisers cannot be expected to fix the nation’s bad financial habits, clearing up after us as we invest in overseas car parks – or preventing us from doing so in the first place. There are simply too few advisers to do this, and such business is largely unprofitable – though that is not to say advisers do not and should not help out where they can.

The answer lies in financial education, as early and as often as possible, to ensure the whole country is familiar with how to invest and how to spot a duff investment. This is the only way to stem the tide of investment unhappiness.

damian.fantato@ft.com