The complaint was made by specialist financial mis-selling solicitors Anthony Philip James & Co (APJ) on behalf of a client.
APJ says it believes the complaint is unique in receiving a decision as many other similar cases appear to be halted.
An unregulated introducer
The FOS adjudicator concluded that Guinness Mahon should have refused the introduction of business because it was aware the client was given advice by unregulated introducer Avocade.
It said that the provider should have had doubts over the competence and motivation of Avacade, and been aware that it’s business model was likely to result in consumer detriment.
These findings led the FOS to rule that Guinness Mahon should have refused the introduction of business and should pay fair compensation.
Guinness Mahon can appeal the decision.
Glyn Taylor, solicitor at APJ, said: “We welcome this decision by the FOS as it is consistent with the Financial Conduct Authority’s view that Sipp operators should not accept high-risk, illiquid investments in a Sipp as they are manifestly unsuitable as a pension investment.
“We’re aware that very few Sipp decisions are being made by the FOS and we’re pleased that due to the hard work of our expert legal team our client has been awarded redress for the losses they’ve suffered.
“We also expect that, following this decision, the FOS should make similar decisions in cases that are pending against Liberty Sipp,” Taylor said.
The decision also follows the FCA’s executive director of supervision – investments, wholesale and specialists divisions, Megan Butler, confirming in a letter to the Pensions Select Committee that the UK regulator is not looking to ban such investments in Sipps.
Five legal cases
The decision comes as APJ has issued five legal cases against Guinness Mahon. The five claimants allege the Sipp provider worked with unregulated introducers to facilitate Sipp investments into non-standard assets which were not suitable for their needs.
The cases relate to investments between 2013 and 2016 in schemes including Ethical Forestry and Global Plantations.
APJ said it is one of the first legal firms to issue cases against Guinness Mahon. The firm is also preparing to issue a further 20 cases against the Sipp administrator in the coming weeks.
Further, in June, APJ announced it was representing more than 100 clients in a multi-million-pound lawsuit involving Guinness Mahon and Liberty Sipp.
Kevin Soutar says:
Excellent work by APJ in sorting out these criminal activities. These Sipp Providers have been turning a blind eye to the thousands of investors that have lost their entire retirement pot and come away with the classic comments ” Nothing to do with us, as we are not regulated to give advice “. Well you now wont be regulated at all,
adkinson@private-capital.com.hk says:
Tip of the Iceberg, many ”Trustees” working with dodgy advisory firms unregulated pushing their crappy products.
John Stirling says:
I’m really split on this.
SIPP paperwork is pretty strong. Heck, the clue is in the name. Providers are not ‘turning a blind eye’ – they have always been utterly unambiguous – you are SELF INVESTING. Those who self invest without advice or an adviser have made that choice, often very deliberately, sometimes for valid reasons. However, a number of SIPP providers could have been quicker to spot really obvious frauds – and should have acted to block investment as soon as they had reasonable suspicion. So I’m not quite sure where the line should be drawn between protecting vulnerable clients, and caveat emptor. But I do know that if caveat emptor is completely removed trouble will follow as the consequences for foolish actions disappear, and the vast sensible majority will lose out.
We have rules that protect others from our actions (a law against drink driving for example), and we have rules to protect us from ourselves (we must all wear a seat belt) – but in general UK law is focussed on protecting the victim from a perpetrator. Laws regarding fraud and misrepresentation are there for that purpose.
However I’m not sure the Financial Ombudsman should be there to protect people from their own decisions in this way – as the FOS appears from my perspective to have a habit of not fully understanding the specific details of a case and subsequently applying the outcome rather more widely than is prudent.