Mr Bird said: “The only reason for the creation of the Sipp and the pension switch was to enable the investments to take place – the BAFSL adviser knew this and has made statements to that effect in his report about the advice he gave.”
He also found Mr P was not an experienced investor and the three Ucis schemes were unsuitable for the level of risk he was able to take.
Mr Bird noted that all the investments were unregulated and speculative, and therefore the investor faced the real possibility of losing all their money.
He added: “Because they were unregulated Mr P did not benefit from the protection afforded by the Financial Services Compensation Scheme – such as applied to his pension before it was switched. The majority of Mr P’s pension savings were invested in these three investments.
“Mr P’s circumstances do not indicate that he was prepared to lose all his money in the pension scheme or that he could do so. They also do not indicate that he was suited to the risks this investment presented.”
The ombudsman concluded that it was inappropriate for Mr P to take the risk of switching his pension, which put his retirement income and benefits at much greater risk.
He also found On-Line was responsible for the whole loss suffered by Mr P as it had advised on the switch and therefore should have assessed the investments.
Mr Bird said: “I am satisfied that Mr P would not have transferred or made the investments had it not been for the failings of On-Line. As a direct result of the On-Line failings, Mr P invested his pension into specialised, high risk and unregulated investments.”
To compensate Mr P, On-Line must now work out the transfer value of Mr P’s previous pension plans if they had not been transferred to a Sipp as well as the transfer value of Mr P’s Sipp now.
It must then pay the difference in value into Mr P’s Sipp so that he is put back into the position he would be in if it were not for the unsuitable advice.
It must also pay any future fees owed by Mr P to the Sipp for the next five years and pay £300 for the trouble and upset caused.
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