Karl Hopper-Young, a chartered financial planner with Sussex IFA, said he was "shocked" by the decision by the Financial Ombudsman Service to demand his firm cough up to £150,000 in compensation for arranging a pension transfer so a client could invest in an offshore development by Harlequin Property through a Sipp.
Mr Hopper-Young said it was particularly galling because he set up the Sipp in 2009 - four years before the FCA published its guidance on Sipp transfers in 2013 that stated advisers should review the underlying investment held in the pension wrapper.
He revealed he was also angry because he had warned the Financial Conduct Authority about the risks of Sipps five years ago and ceased to do business in this area because of his concerns.
He said: "We did four Sipps in 2009 and then we stopped. The reason we stopped was because I didn't like doing telephone appointments.
"I wrote to the FCA and said there was widespread mis-selling in Sipps and they wrote back and said they had received a few similar letters and they were looking into it.
"Our firm has been going for 20 years and we have never had an upheld complaint for 20 years.
"If I had known that setting up a Sipp wrapper would tie me up in these liabilities I would never have done it."
Mr Hopper-Young said his firm had been contacted by the client's adviser to set up a Sipp for him.
A fact find was carried out but Mr Hopper-Young never met the client and did not hear back from him in the intervening years.
He said: "We sent them an annual letter to offer them a review and never had a reply. Then all of a sudden we had mis-sold them.
"On reflection we were probably hoodwinked."
In finding against Mr Hopper-Young's firm, the ombudsman Roy Milne said Sussex IFA should have clarified the risks associated with investing in Harlequin when the firm learnt why the client was seeking to restructure his pension arrangements, even though the IFA was only involved in a transaction to arrange the Sipp.
But Mr Hopper-Young said warning someone not to invest in Harlequin would have amounted to advice as well, meaning he had believed his firm could have faced a liability if the client had gone on to invest anyway.
He said: "If you have got a Sipp client who has got some traditional asset and then they suddenly go off and buy a whole load of bamboo, do I have to step away from the Sipp? Because the future of that Sipp value will depends on all the assets in it."
Mr Hopper-Young said his firm had not done any advice on Sipps since 2009.
The ombudsman ruled that the client should be put back to the position he would have been in, prior to investing with Harlequin, but said that he is limited to awarding a maximum of £150,000 in compensation.
A spokesman for the Financial Ombudsman Service said: "We don’t rely on hindsight when reaching a decision –- when we’re considering what is fair and reasonable in all the circumstances of the case, we take into account relevant law and regulations; regulators' rules, guidance and standards; codes of practice; and (where appropriate) what is considered to have been good industry practice at the relevant time.
"The requirement for an IFA to advise on the pension wrapper and the underlying investment arise out of the regulatory Rules and Principles. The 2013 Alert was issued by FCA to help firms to consider what they need to do to meet their responsibilities arising out of the regulatory Rules and Principles. These therefore properly form part of our relevant considerations."
damian.fantato@ft.com
