SIPP  

Quilter to pay out after former Caerus AR leaves client's Sipp in cash

Quilter to pay out after former Caerus AR leaves client's Sipp in cash

Quilter has been made to pay out after an adviser left a client’s self-invested personal pension contributions in cash and admitted it had not carried out annual reviews despite the client being charged.

The Financial Ombudsman Service found J & P Financial Services should have advised its client to invest his regular Sipp contributions in order to grow his funds.

As the firm was an appointed representative of Caerus at the time the advice was given in 2015, the Fos has now ordered Quilter to pay the client compensation. Quilter bought Caerus in 2017.

The issue first arose when the client, who the Fos called Mr L, was advised to set up a Sipp to accommodate the transfer of a personal pension, which was then used to purchase part of a commercial property to be used by Mr L’s business. 

The commercial property was owned by Mr L, his business partner and Mr L’s brother.

But in 2015, Mr L and his business partner wanted to buy his brother’s share of the property – so Mr L agreed to make regular contributions to his Sipp to buy the remaining part of the property.

J & P Financial recommended that Mr L paid £500 each month into the Sipp and it was agreed that his attitude to risk was “moderate” and 1 per cent would be taken for ongoing advice fees.

However Mr L didn’t have a review after 2016 and by 2018 he realised his contributions to the Sipp were being held in cash.

He complained that he was led to believe his money would be invested and he wouldn’t have made further contributions if he had known they would remain in cash.

J & P Financial said it believed Mr L’s intention was to leave the funds in cash due to the impending property purchase.

However, it admitted that it had not conducted annual reviews despite Mr L still paying a fee.

The firm offered Mr L a total of £1,750 as a refund for the advice fees it had taken, which included £250 for the distress and inconvenienced caused by “administrative oversights”.

But Mr L brought his complaint to the Fos.

Ombudsman findings

Ombudsman Keith Lawrence found there was no evidence to suggest that investment advice was given in respect of the rental income or the regular contributions and that Mr L was recommended that the contributions should be held in cash.

But in order to buy the share of the property Mr L and his business partner would have needed around £60,000. 

It would therefore have taken them around five years to save that level of capital based on the regular contributions they agreed to make.  

The Fos said that J & P Financial would have known this and should have recommended that Mr L invested his contributions in line with his attitude to risk.  

Lawrence then said that J & P Financial’s ongoing service would have allowed it, and Mr L, to reduce any investment risk if it was needed.