In 2012 a client, referred to as Mr G, replied to an advert promoting green investments that he saw in a trade publication.
An unregulated business contacted him and referred him to TWS, which sent him a report dated 25 June 2012.
The report, among other things, stated Mr G – who at that time was self-employed, married, in good health with two dependent children - was unhappy with his personal pension and wanted to achieve higher returns.
TWS stated it gave no investment advice adding this was a matter for the trustees of the scheme to ensure any investment choice was right for Mr G.
The new occupational pension scheme with its higher charges needed to achieve 0.3 per cent annually to match the existing plan, assuming annual growth of 5 per cent.
If Mr G understood and was happy to accept the additional charges, in return for a potentially higher retirement fund, then the TWS adviser stated they would be happy to recommend a transfer.
TWS said Mr G, who was aged 50, owned his own home and wanted to retire at the age of 65, was eligible to join an occupational pension scheme.
His pension fund of £54,810 had a transfer value of £54,160 and was invested in eight different equity funds, which were all above average risk.
His risk profile was recorded as realistic and described as “you would like to preserve short term financial security through low risk investments, but also wish to benefit from the prospect of good long term returns from higher risk investments, which may include some lower risk share/equity based investments.”
The trustees would invest the transfer value on Mr G’s behalf in a range of approved assets such as cash, stocks and shares, government securities and property.
The initial set up cost was £350 plus VAT with annual ongoing fees of £250 plus VAT and TWS stated it would not provide ongoing reviews.
TWS said: “You have confirmed that you would prefer to transfer these funds to another provider so that they can be invested into a wider range of assets and funds better suited to your risk profile.
“Indeed you are keen to consider your own investment options.”
Mr G gave the ombudsman a brochure of the fund into which his transfer value was to be invested.
The fund was Global Forestry Investments where the aim was to return as much deforested land to its natural state.
The brochure indicated that the monies would be invested in a Brazilian rainforest.
The fund was apparently working with the local government in order to build a school and create a performing arts and sports academy.
The name of the fund was the Para Sky Plantation Project.
The brochure gave reasons why investing in timber was beneficial.
The trustees were Title Trustees Limited and the investment was medium to long term with no redemptions available for the first four years.
Green Footprint Investments would redeem the original investment adding 5 per cent.
There would be a fixed investment return which was contractual.
Mr G signed an application form to join the scheme in July 2012.
This asked him to declare that he was a director, officer or employee of the company which established the scheme; or that he was seeking consent of the provider of the scheme to join the scheme.
Mr G gave the ombudsman a copy of a letter from ACMA to ‘Mark’ confirming that an interest payment of £82.74 gross had been paid into the scheme.
This payment had been received from ‘EcoQuest PLC which was the nominated investment within the Green Retirement Pension Plan.
When Mr G had recently divorced and thinking about accessing his pension fund he contacted the unregulated firm he first spoke to and was told that the person with whom he had been dealing with had left the company.
Mr G was also told to contact the Serious Fraud Squad.
They told him to contact Green Trustees who informed Mr G that the Green Retirement Pension Scheme was a fraudulent arrangement and was largely worthless.
They also said his transfer value hadn’t been invested in the Para Sky Plantation Project.
Mr G then asked the ombudsman to consider his complaint.
He was told by the ombudsman that they couldn’t look into the unregulated firm’s involvement as this business was not regulated in the UK however TWS’s involvement could be examined.
Fos informed TWS about Mr G’s complaint in April and June 2016.
TWS objected to the ombudsman considering the complaint arguing Mr G hadn’t said in the complaint form that it was responsible for the advice plus he hadn’t referred the complaint to them first.
TWS pointed out the report confirmed to Mr G that no advice was given and they asked for evidence the scheme was worthless.
The adjudicator replied to TWS that Fos rules allowed the service to tell consumers who we thought was responsible for the complaint.
In a final decision, ombudsman Roy Milne said TWS was required to comply with the regulations.
He said: “When giving its advice it had to gather enough information to show that it knew its client. And it had to give suitable advice.
“I don’t think TWS can avoid these obligations by limiting its role to only advising on the transfer.
“TWS was required to give suitable advice. It is difficult to see how it could have given suitable advice without considering the investment to be made. Clearly the success of the transfer depended on the performance of the new investment.
“If TWS had given suitable advice, Mr G would not have suffered the loss. I accept that other businesses were involved in the transfer. I think that TWS gave unsuitable advice that has caused Mr G to suffer a loss.
“I am aware that there are allegations of fraud. The outcome of any proceedings that may arise is not yet known and may be some way off. I am not in a position to make any judgement about the conduct of those involved. But I acknowledge that it may be relevant to how I determine fair compensation for Mr G.”
TWS was told to obtain the notional transfer value of Mr G’s pension plan if he had not been advised to transfer it and obtain the current transfer value of Mr G’s benefits in the Green Retirement Pension Scheme.
TWS was ordered to pay a commercial value and take ownership of Mr G’s investment.
The pension transfer specialist also has to pay £500 for the distress caused to Mr G by the loss of his pension fund.
emma.hughes@ft.com
