SIPP  

Intrinsic rows with ombudsman over execution-only client

Intrinsic rows with ombudsman over execution-only client

The Financial Ombudsman Service has told Intrinsic to compensate a client who specifically asked for no advice.

The client, referred to as Mrs W, complained she was given unsuitable advice by Chartered Financial Solutions Limited (Chartered Financial), an appointed representative of Intrinsic Wealth Limited (Intrinsic). 

She said the advice to transfer into a self-invested personal pension (Sipp) exposed her to more risk than she wanted to take. 

Article continues after advert

But Intrinsic argued the Financial Ombudsman Service should reject the complaint as a technical note from the body stated a business needs to provide clear and credible evidence that an investment is "execution-only" to prove no advice was given.

Intrinsic had a signed letter from the client dated July 2010 to that effect.

But the ombudsman rejected Intrinsic’s argument and ruled the adviser was aware of the fund Mrs W intended to invest in and should have advised her against it, even though she specifically asked for no advice in this area. 

In her original letter of complaint, Mrs W confirmed research into the investments she wanted had been carried out by her husband. 

The adviser's suitability letter confirmed that Mrs W wanted to self-invest and he included guidance notes that confirmed he would recommend a mix of asset classes but the investment method Mrs W had chosen was a high risk strategy. 

Even with these warnings, Mrs W still went ahead and invested in Green Oil. 

In a final decision, ombudsman Doug Mansell said: "I note Intrinsic argues that, according to the law, Mrs W's complaint that she was given advice about investing in Green Oil fails. I don't agree with this point, and I note Intrinsic don’t say in what way I’ve not followed the current law. 

"For my part, I’m not aware of any aspect of the current law that I’ve departed from in reaching my decision. It’s not in dispute that the Chartered Financial adviser gave Mrs W advice about the Sipp. The established law, as well as the regulator’s rules, says advice must be suitable. 

"The question of suitability must include the investments to be used in the Sipp, as well as the Sipp itself. So contrary to the arguments put forward by Intrinsic, I think my view in this case is supported by current law. 

"As set out in the FSA’s 2013 alert, the adviser had a duty to also take account of the investment that was to be used in the Sipp. While the adviser did refer to the investment being high risk, I don’t think this relieved him of his duty to give suitable advice."

Intrinsic was ordered to compare the value of Mrs W’s pension, if she had not transferred, with the current value of her Sipp and pay the difference plus £300 for the trouble and upset caused.