SIPP  

Adviser ordered to pay out over 'execution-only' business

Adviser ordered to pay out over 'execution-only' business

Coffey Brooks must pay redress to a client after transferring part of her pension into a self-invested personal pension (Sipp) to invest in an unregulated scheme.

In a Financial Ombudsman Service (Fos) decision, a client of Coffey Brooks complained that she received unsuitable advice when she opened a Sipp and invested into Global Forestry Investment, an unregulated scheme.

The client, who the Fos called Ms G, was an existing client of Coffey Brooks who decided to transfer £27,000 of her existing personal pension plan to make the investment.

The investment did not perform as well as expected so in 2016 Ms G complained about the advice she had been given.

The adviser argued that it hadn’t given her any advice regarding the investment and the Sipp transfer had been completed on an execution-only basis.

When giving evidence to the Fos, Ms G said she visited Coffey Brooks to talk to her adviser about investments and he said she might be interested in a green investment he had heard about as he knew she was an ethical investor.

Ms G was then told to visit investors Marcus James Group who would explain the investment to her. She met the adviser from Marcus James Group at Coffey Brooks’ office and signed papers to open the Sipp and transfer her pension.

Coffey Brooks contests this and said that Ms G came to the office for a general chat when she saw a brochure from Marcus James Investments.

He told her that it was an unregulated ethical investment so wouldn’t recommend using it but he put her in touch with a representative of Marcus James, whom Ms G met at the Coffey Brooks office.

He told Ms G that Coffey Brooks was not recommending that she should invest in this fund and if she went ahead it would be her own decision.

But the ombudsman determined that Ms G did not have any intention of doing anything with her existing pension pot before meeting with her adviser.

Ombudsman Doug Mansell said: “I understand Ms G had a number of existing investments which she could have sold in order to make the investment. But instead she used her pension to do this, which necessitated the transfer into a Sipp.

“I find it very unlikely she would have been aware of this possibility, or the process that would be required, before meeting with her financial adviser.”

The Fos also decided that Ms G would have understood that her adviser was promoting and endorsing the investment and approved of it as being suitable for her.

The provider of Ms G’s existing pension wrote to Coffey Brooks on April 26, 2012. 

It said Ms G was considering transferring her benefits, and enclosed an illustration of the current transfer value of £33,350 and details of the benefits she might receive. 

On May 8, 2012, Coffey Brooks sent a transfer form to the provider and confirmed that Ms G only wished to make a partial transfer of £27,000.