A collapsed advice firm which had Financial Conduct Authority permission restrictions for defined benefit pension transfers has entered default.
BlackStar Wealth Management, based in the West Midlands, was declared in default by Financial Services Compensation Scheme today (January 14), five months after it appointed administrators.
This means the FSCS is satisfied the firm is unable to pay claims for compensation made against it and it paves the way for clients of that firm to make a claim for compensation.
It also means the firm has received at least one eligible claim so far.
A spokesperson for the FSCS told FTAdviser: “FSCS was unable to declare Blackstar Wealth Management in default until we had an eligible claim. As this has now happened, we have declared that the firm has failed.”
BlackStar entered administration in August 2019 after it was revealed that it had given poor advice on investments which included troubled German property scheme Dolphin Capital and the now defunct Beaufort Securities.
The firm previously had its investment and defined benefit pension permissions restricted following a section 166 review.
According to the FCA register, the firm was not allowed to carry out any pension transfer business until it had prior written consent by the FCA.
It was also told all advice on investments was subject to oversight by a skilled person under s166.
BlackStar had faced a number of claims at the Financial Ombudsman Service.
In one claim, BlackStar was ordered to compensate its client after she complained that the advice she was given to transfer her pension to a self-invested personal pension and invest into two high-risk investments was unsuitable for her.
Her funds were invested into Dolphin Capital and into a discretionary managed portfolio with Beaufort Securities.
BlackStar recommended that she should transfer her four personal pensions into a Sipp and invest 58 per cent in Dolphin and 42 per cent with Beaufort.
This was despite its report stating that investing a large portion into a single asset was risky.
It is not known exactly how many complaints the Fos has received against BlackStar as it does not publish company data where it has received fewer than 30 complaints and resolved fewer than 30 complaints in a six-month period.
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