Financial Ombudsman Service  

Claims against adviser reach FSCS

St Martin’s Partners said that Mr R had been aware on what basis the services were being provided and that he had signed an execution-only notice which had clearly set out that no advice would be given.

But, an adjudicator at the Fos said St Martin’s Partners should have known that pension transfers can be complex and few clients had enough knowledge to weigh up the risks and benefits of pension transfers without receiving advice. 

The adjudicator also said the firm should have known that consumers like Mr R were at risk of suffering a financial loss by transferring a pension without taking advice.

He believed the firm should have refused to accept the Sipp and transfer applications.

Therefore he concluded that the firm was liable for any losses suffered by Mr R.

What's more, the firm argued Mr R had initially instructed Finance in Medicine Limited not St Martin’s Practice and that all regulatory responsibility for Alternative Asset Finance was with Finance in Medicine from March 7, 2011 until August 28, 2012, when it became part of the advice firm. Finance in Medicine Limited is no longer trading.

The firm said Mr R had been introduced to Finance in Medicine in July 2012 and instructed them to set up a Sipp, obtain transfer papers and proceed with the transfer. On July 28 Mr R signed the agreement for the execution-only transfer.

But ombudsman Louise Wilson decided that Mr R was a client of St Martin’s Partners during the relevant time.

Ms Wilson said: “I have seen a letter from the Financial Services Compensation Scheme (FSCS) in respect of a claim made to that service along similar lines to this one made about St Martin’s Partners, about Finance in Medicine. 

“This letter sets out FSCS’ finding that they couldn’t consider the claim, as it ought properly to be made to St Martin’s Partners.”

Ms Wilson believed that St Martin’s Partners played a sufficient role in the activities that led to a Sipp being started in Mr R’s name and his funds being transferred into it, that they should bear responsibility for any losses.

She also concluded that Mr R could not be described as a true execution-only client.

Ms Wilson said: “I also don’t think that the usual type of individual who would act on an execution-only basis, open a Sipp and make an unregulated investment with over 50 per cent of their pension funds, would be the type of person who would later start making monthly contribution of £30 or leave the remainder of the Sipp in cash.”