Rowanmoor faces hundreds of Sipp complaints

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Rowanmoor faces hundreds of Sipp complaints
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The Fos said it has received 400 complaints related to Sipp due diligence involving Cape Verde-based property scheme The Resort Group. Of these, the ombudsman said, the "vast majority" are against Rowanmoor.

Due to the volume of similar cases, the ombudsman is processing a number of sample cases first in the hope it will speed up the process for the remaining claims. The Fos estimates it will take about four months before it can begin to process the bulk of the cases.

Chris Bryans, an adviser who also runs claims management company Complaints SOS, said he was representing dozens of customers with Rowanmoor pension plans. 

He said: "What surprises us with all of these Sipp-related complaints is the sheer volume of them. 

"While we don’t doubt that the issues at Rowanmoor pre-date the existing staff and management, who have a good grasp on the regulatory aspects of these plans, we feel that more could and should have been done to support these customers."

Rowanmoor declined to comment on the figures at the Fos, but pointed to its "clean record" on claims involving TRG. 

Mr Bryans claimed many of these customers were allowed to sign property purchase contracts when they did not even have enough money to buy the property. One of his clients, Wendy Taylor, invested in an apartment at TRG's Dunas Beach resort 10 years ago.

Ms Taylor and her husband were advised to transfer out of their occupational pension schemes by an adviser from CIB Life, which had been introduced to them by TRG and has collapsed since.

The adviser helped them set up a mortgage structure whereby they would use their Sipp as a downpayment for the purchase, but around two years later the lender pulled out as the hotel complex had not yet been built.

By that time the couple were contractually obliged to continue with the sale, having put down the deposit months earlier. As a result they swapped their apartment for two fractional shares in a cheaper hotel room costing £95,000.

The Financial Services Compensation Scheme currently values fractional shares in TRG at nil for compensation purposes, while it takes independent valuations for whole apartments.

In 2018 when the couple looked into selling the asset, they discovered they did not hold the title deed.

Rowanmoor told them they could obtain the title for a €3,452 (£3,084.43) fee, covering solicitors' legal fees and local government tax, but warned them TRG had the right to keep their investment should completion not take place.

Ms Taylor said she refused to invest more capital into the investment, having become aware of growing investor concerns around it.

The couple have lodged a claim with the FSCS in respect of bad advice given by defunct CIB Life, but they also took a claim to the Fos that argued that Rowanmoor had failed in its duty of care towards them.

Ms Taylor said she did not understand why her Sipp was allowed to "sign a contract to buy an offshore, off-plan property without an independent solicitor, without a mortgage offer in place and without an independent valuation of the hotel apartment".

Mr Bryans said: "The Rowanmoor clients we have dealt with have said they trusted the investment was appropriate for them because this was a Financial Services Authority-regulated pension provider and as one of the largest Sipp providers in the country, they would not have permitted this investment if it was not OK for their pension plan."

The couple said the rent in 2019 when the hotel was fully open was £890 and the fees were £630. The fees this year were closer to £2,000 with barely any rent.

Ms Taylor claimed her investment, which had cost her £47,000 initially, has been independently valued at £17,000, although Rowanmoor last September cited a 2018 valuation report that put an overall value on the apartment of £168,796, with her 44 per cent share valued at £74,270.24.

The report, dated 31 August 2018, had been prepared by chartered surveyors Gerald Eve, according to Rowanmoor.

Rowanmoor said it did not comment on individual cases but confirmed the 2018 valuation of the property: “We can confirm that we always accept valuations prepared in accordance with the RICS Red Book.”

Change of direction

Sipp providers have historically been somewhat shielded from complaints about the investments in their pension wrappers, as clients chose to bring their claims against the advisers instead.

But as more advisers have folded, and FSCS claims proved less financially rewarding than those made by the Fos, pressure has grown on other parties in the supply chain.

This was intensified by a number of recent court rulings, which established that Sipp providers in certain cases have a duty to their clients to prevent them from harm, including carrying out due diligence on the underlying investment. One of these claims, involving Carey Pensions, is still being contested.

The ombudsman's decisions database does not list any finalised claims against Rowanmoor in association with the TRG investment to date.

The Sipp company does show up on three successful claims against advice business Insight Financial Associates and TRG, as well as six unsuccessful efforts.

A Rowanmoor spokesperson said: “We ceased working with CIB and Insight Financial Associates. Although the FSCS has paid out against advice provided by CIB, this is not the case with Rowanmoor – we continue to have a clean record in this respect.”

Mr Bryans concluded: "What is most disappointing is that so many genuinely good IFAs apparently reported [complaints] to the regulator and it appears no action was taken at the time.  

"And the same IFAs now have to meet the higher FSCS costs, driven in part by the losses on these [same] investments."

carmen.reichman@ft.com