In the decision in December last year, ombudsman Gideon Moore upheld a complaint by ‘Mr M’ and said the firm should put Mr M back in the position he would have been if he had been given suitable advice.
Mr M said he received a cold call offering a review of his pension from a representative of ‘UK Life’ in 2017, who referred him to Pi Financial Limited.
Pi obtained Mr M’s existing financial arrangements in October 2017, and in a suitability report in November that year the adviser said Mr M was looking to diversify his pension into "more exciting asset classes" without making additional contributions.
Mr M had a Standard Life plan which was invested in its ‘mixed blend’ fund and charged 0.27 per cent (as part of a group personal pension discount). He also had an Abbey Life plan invested in its international fund, and an Aviva plan invested in a with-profits fund.
At the time, Mr M was 50, co-habiting with no dependents and planned to retire at age 67. He had a £90,000 mortgage on his main residence, worth £250,000, which he expected to be paid off by age 58 and another property worth £100,000 as well as a plot of land that he was looking to build properties on.
A questionnaire showed Mr M had an attitude to risk score of eight out of 10, however the Pi adviser noted that his assets were not easily realisable into cash and he should be classed as more of a middle of the road balanced investor, though he also said Mr M had a high capacity for loss.
The adviser said some of the plans Mr M was invested in were ‘old school’ and offered insufficient investment options overall.
Recommendations
Pi recommended Mr M transfer his pension into an Intelligent Money Sipp, with ‘recommendations’ from Mayfair Capital Limited.
The Fos said of Mayfair Capital: "Whilst it appears to have been Mayfair’s long-term intention to become a DFM and it has since gained the FCA ‘managing investments’ permission, it was a new entrant to the market in 2017 and did not yet hold that permission."
The recommended Sipp had higher fees than Mr M’s original investments, however he believed these charges would be covered by higher growth in the portfolio.
