SIPPSep 24 2019

Intrinsic loses five complaints about Ucis advice

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Intrinsic loses five complaints about Ucis advice

In all five cases, the claimants transferred their pensions into a self-invested personal pension and subsequently invested in unregulated schemes with Sustainable Growth Group (SGG), while two claimants also invested in Global Forestry.

The SGG group of companies were placed into administration in March 2012 and subsequently, as a result of a Serious Fraud Office investigation, in 2014 three directors were jailed for 28 years in total for their roles in the mis-selling of investments in biofuel.

The SFO is currently conducting an investigation into alleged fraud concerning Global Forestry Investments.

Each of the five Intrinsic clients complained about advice they received from Intrinsic's appointed representative ER Network Ltd, which also ran unregulated firm Vita Investment Planning on the side, according to the Fos.

In each case the clients transferred their pensions into a Sipp and shortly after invested in the unregulated investments. They all complained after SGG went into administration in 2012.

Where Vita was involved, in four of the cases, Intrinsic claimed it was not responsible for the advice as it had not been given by its AR but by the unregulated side business.

But the Ombudsman did not agree.

Ombudsman Michael Stubbs said in one of the cases: "The adviser says that he separated the Sipp and the SGG advice – ensuring that the SGG advice was given by his non regulated business Vita Investment Planning.

"There is some evidence that supports this. For each of the two SGG investments a letter, on Vita Investment Planning paper, signed by Mr R has been produced, which confirms that no advice has been given.  

"Vita Investment Planning might be a ‘recognisably independent business’ in respect of the SGG advice. However, there is nothing to connect this business to the pension switch advice. [...] my conclusion is that this advice was given by the ER Network."

Ombudsman Stubbs decided that each case should be upheld as the purpose of the advice was to enable investment in the unregulated schemes.

In one of the decisions, Mr Stubbs said: “When giving the advice to switch the personal pensions to the Sipp, the adviser should have considered the investments to be held within the Sipp.

"However, to do so would require the appointed representative to know what the intended investments to be held within the Sipp were.

“It is clear from the appointed representative’s version of events that he was aware that the purpose of the transfer to the Sipp was to enable investment in SGG products and Global Forestry.”

In all five cases Intrinsic was ordered to pay each claimant £500 for the distress and inconvenience caused.

In four of the cases the firm was ordered to pay compensation by comparing the current value of the client's Sipp to the total value of their previous pension as well as pay five years’ worth of future fees owed by the client to the Sipp.

In the remaining case the client was deemed a sophisticated investor and therefore a medium as opposed to low risk investor.

Here the Fos did not consider that a Sipp was an unsuitable product for the client but it did think the investments were unsuitable. He therefore calculated the redress differently in this case.  

The Fos decided the client should be put as closely into the position he would be in if he had been given suitable advice.

Intrinsic rebranded as Quilter Financial Planning in July 2019 after its parent company completed the acquisition of Lighthouse in June.

Quilter did not want to comment on the Fos decisions as the cases pre-dated the acquisition of Intrinsic in 2014.

amy.austin@ft.com

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