The UK’s Financial Ombudsman Service (FOS) has found in favour of five individuals who lost nearly £100,000 ($131,184, €112,482) after transferring their savings following a free pension review.
Specialist financial mis-selling law firm Anthony Philip James & Co (APJ) represented the claimants who each transferred between £13,000 and £26,000 into self-invested personal pensions (Sipps) with provider Guinness Mahon.
APJ said the FOS rulings challenged the argument of the Sipp provider that it only accepted business on an execution-only basis, meaning it was not liable for any losses suffered.
The decisions pave the way for thousands who have lost money after free pension reviews by scam advisers to claim back their money, the law firm said.
This is the second success for APJ against the Sipp provider after the FOS upheld a mis-selling complaint against Guinness Mahon in July.
Tree plantations in Costa Rica
Victims were cold called by unregulated introducer Avacade and persuaded to invest their pension pots into Ethical Forestry, a scheme offering guaranteed returns of up to 15% from tree plantations in Costa Rica.
The scheme failed after the plantation was hit by a hurricane.
In August, the Financial Conduct Authority announced that the directors of Avacade, which entered administration in 2017, are subject to civil proceedings after they were found responsible for £86m in misleading and scam pension transfers affecting at least 2,000 people.
Avacade has also been named in a law suit against provider Liberty Sipp, regarding an unregulated investment scheme based in the Seychelles.
Business should have been refused
Glyn Taylor, solicitor at APJ, said: “Our clients have all been mislead by unscrupulous advisers at Avacade who have subsequently tried to dodge all responsibility. These clients simply wouldn’t have moved their money out of their original pensions had it not been for the unsolicited advice from Avacade.
“The FOS decisions are all similar in that they establish that Guinness Mahon should have known that it would not be treating the individuals fairly, as it has a duty of care under FCA conduct of business rules, if it accepted business from Avacade, so it should have refused the introduction of business.
“As Avacade is an unregulated adviser, our clients had no option to go the Financial Services Compensation Scheme (FSCS) for compensation, so until now had been left high and dry. In recognising that Guinness Mahon is also liable for the losses the FOS have given these people the chance to reclaim their pension pots.”
The FOS ruled that APJ clients should receive compensation from Guinness Mahon to put them back in the position they would have been had they not transferred their pension from their original workplace schemes.
The law firm said it has more cases lodged with the FOS against Guinness Mahon.
Taylor added: “We have over 1,500 clients who we believe have been mis-sold Sipp investments by Avacade and other untrustworthy advisers.
“The rulings against Guinness Mahon pave the way for others in similar situations, we’re now seeking to secure similar rulings for other clients who invested with other Sipp providers.”
Jonathan Compton says:
Interesting ruling that investors are not responsible for their own mistakes. Looks like the Greenspan-Bernanke Put has now been extended from markets to individuals. There is some logic that the platform provider should have spotted that the investment was via an unregulated scheme but still difficult to see why the platform is liable for execution only clients who – and let’s be honest – were either so greedy or dim to believe they could make 15% p.a. form growing beans in Costa Rica. Without personal responsibility for investment the system falls apart and regulations stifle the rest of us. The consequences are not good..