The Financial Ombudsman Service found the adviser should have properly protected the client from the investment, which he was 'unable to afford'.
The client, who the Fos called Mr B, first got in contact with Facts & Figures in June 2011 to transfer his four pension pots to a Sipp so that he could then invest in an overseas property development run by Harlequin.
Mr B was told about Harlequin by an unregulated introducer.
At the time Mr B had four pension plans with a total transfer value of £35,000. These included two personal pensions with a value of £19,000 and two deferred pension benefits from former employers which were valued at £16,000.
Facts & Figures advised Mr B that he should not transfer to the Sipp or invest in Harlequin where he would be required to pay a deposit of £33,000.
The adviser stated that it was only willing to arrange the transaction if Mr B signed an insistent client form which set out that it was a high risk investment.
Mr B signed the form on June 29, 2011 and £33,00 was invested into Harlequin which subsequently failed.
It was stated that if Facts & Figures had understood the investment they it would have realised that Mr B could not complete the purchase. The initial payment of £33,000 would be followed by further stage payments as the total purchase price was £110,000.
The value of the Sipp was £35,972.28 and Mr B had no other funds to pay the remaining instalments.
The adviser argued that regulations did not state it must advise on the underlying investment so it did not receive the full details of the investment.
However, in January 2013 the Financial Conduct Authority issued an alert that reminded firms that the rules regarding advising on investments were in force at the time of the sale of the Sipp to Mr B.
The Fos noted that the alert issued did not make any changes to regulations but simply re-stated the principles that already applied in 2011 when the advice was given.
Therefore the Fos ruled that Facts & Figures did have to take into account and advise on the suitability of the investment as well as the transfer of the Sipp.
The Fos also said that Mr B should not have been treated as an insistent client and he was relying on the business for appropriate advice.
Ombudsman Adrian Hudson said: "I do not consider that the business should have arranged the investment in Harlequin when Mr B was an inexperienced investor who could not afford it but who had been told by an unregulated introducer that the scheme was great.
"The business should have refused to transact the business."
For one of the occupational pension schemes Facts & Figures could not assess how likely it would be to match the benefits. For the other transfer value it noted that it was unlikely to provide returns to match the benefits given up.
Therefore the Fos ruled that the advice to transfer into the Sipp was unsuitable.
"If Facts & Figures had advised Mr B not to transfer his pension arrangements into the Sipp I think that he would’ve accepted its advice," said Mr Hudson.
"I haven’t seen enough to persuade me that Mr B would’ve still gone ahead with setting up the Sipp if he’d been told clearly about the rrisks and the additional payments that would be required later.
"If Mr B had known about all of these facts I consider that he would have decided not to invest in Harlequin property and he would not have transferred to the Sipp."
The Fos ordered Facts & Figures to compensate Mr B so that he would be as close to the position he would be in if he had not transferred his pensions.
The firm must also pay any future fees owed by Mr B to the Sipp for the next five years and pay him £200 for the distress and inconvenience.
amy.austin@ft.com
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