Investments  

Failure to review transferred client’s pension costs adviser

Failure to review transferred client’s pension costs adviser

The Financial Ombudsman Service has told an advice firm it should have reviewed a transferring client’s finances within two weeks.

In 2009 the client, a semi-retired landscape gardener referred to as Mr F, met with his adviser when she was working for a different firm. 

At that time Mr F was aged 60 and was looking to retire in some six years’ time. 

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Mr F was advised to invest all his pension fund of more than £45,000 in the Centurion DMS Enhanced fund. 

The adviser moved to Bank House Investment Management Limited in 2010 and took Mr F with her as a client. 

However, neither Bank House nor the adviser offered Mr F the opportunity to review his finances and his pension plan during the first year after he became a Bank House client. 

Some nine months elapsed without a review, during which time the Centurion DMS Enhanced fund became illiquid. 

Centurion wrote to shareholders on 13 June 2011, informing them of the situation stating the fund might remain closed for redemptions for another three to five years. 

Mr F then complained about the advice he had received from his former firm, which was upheld. 

However, the redress was capped at the date when he became a client of Bank House, on the basis his previous firm was no longer a party to his information and was no longer responsible for advising him. 

Mr F then complained to Bank House, stating they had caused his losses by failing to alert him that the investment in the Centurion DMS Enhanced fund was inappropriate in time for him to withdraw his capital before the fund became illiquid. 

Bank House rejected his complaint saying they were not responsible for advice he had been given by the adviser when she worked for her former firm. 

Bank House also stated they had attempted unsuccessfully to obtain money from Centurion DMS for a different client before the fund was declared illiquid. 

Bank House therefore argued this supported their view that Centurion DMS would not have released Mr F’s funds, even had his portfolio been reviewed by the adviser in the first year of his association with Bank House. 

In a final decision, ombudsman Adrian Hudson said when Mr F became a client of Bank House it should have arranged a review of the investments he held shortly after it had been appointed. 

Mr Hudson said: “I consider that this was required so that the firm could have checked the suitability of the assets held and recommend changes if these were required. 

“I consider that this should have been completed as a matter of urgency and that the results would have been available two weeks after Bank House was appointed as Mr F’s advisers. 

“This would have been by 1 October 2010. Had the review been carried out by Bank House I consider that it would have been aware that Mr F had invested 100 per cent of his Sipp in the Centurion DMS Enhanced fund and that this was inappropriate for an inexperienced investor who was planning to retire in the next few years.”