In three preliminary decisions in recent weeks, the ombudsman found Liberty had breached its duty of care to clients because it should have known that the investments were high risk and could cause consumer detriment.
The decisions are preliminary, meaning that there has not yet been an official ruling and they can be appealed.
Three individuals invested a total of £36,200 into the Ethical Forestry scheme through Liberty Sipp, on the advice of introducer firm Avacade, which cold called the clients and recommended they move their pensions.
Glyn Taylor, financial mis-selling solicitor at Anthony Philip James & Co, said: “We’re delighted that the FOS has recognised what we’ve been arguing for months, that Liberty Sipp had a responsibility to carry out due diligence on the business it accepted from Avacade and in failing to do this, and agreeing to accept such a large amount of questionable business from Avacade, it is liable for clients losses.”
The FOS adjudicator found “there was a high chance that a lot, if not all, of the business introduced by Avacade, would contain a high risk of significant consumer detriment”.
The adjudicator said it therefore was not “fair or reasonable for Liberty to have accepted [the clients’] applications on the basis and manner proposed”.
In the three decisions, the FOS adjudicator stated that “Liberty Sipp should compensate the clients to put them back in the position that they would have been in had they not transferred their pensions, including any gains they would have made in their previous pensions, and also pay a nominal sum of £500 to each for the trouble and upset caused”.
Liberty Sipp can appeal the preliminary decisions.
If upheld, Anthony Philip James & Co believes it will pave the way for thousands of others who have lost money after free pension reviews from Avacade and other introducers to get redress for their losses.
APJ also has 500 similar cases lodged with the FOS against Liberty Sipp, with a value of more than £18m.
Taylor added: “We’re confident that the FOS will now issue similar decisions on behalf of many more of our other clients who have lost money after putting their trust in Avacade and Liberty Sipp.
“Our concern now is that the hundred of victims we know of are only the tip of the iceberg.
“We’ve had more than 150 calls from people who have lost money after investing with Liberty Sipp in the last month alone.
“It’s terrible to hear how these people are struggling having been scammed and we urge anyone who has been affected to seek help so they can get the compensation they deserve.”
International Adviser has contacted Liberty for a comment.