DevDosh Ltd thinks that everyone spends a little time each day dreaming of what retirement will be like, the places we want to visit, the extra time with family and building that classic car we want to build. The point DevDosh Ltd making is it is a time in our life that we plan for and look forward to or at least it should be.
So as professional working in the financial sector it is always something that it is extremely upsetting and close to home when you hear of some poor individual that has been poor advice and guidance with their pension fund.
Currently DevDosh Ltd found that the UK’s Financial Ombudsman recently concluded in the case a client only known as Mrs. R who complained about advice she received from Bright Financial Partnership back in 2013.
Bright Financial advised Mrs. R to transfer her personal pension into a self-invested personal pension.
From Wikipedia, the free encyclopedia
A Self-Invested Personal Pension (SIPP) is the name given to the type of UK government-approved personal pension scheme, which allows individuals to make their own investment decisions from the full range of investments approved by HM Revenue and Customs (HMRC).
The capital was then invested into an overseas property based in the tropical paradise of Freedom Bay, Saint Lucia.
Mrs. R was a 43-year-old residential care worker at the time earning 19,000 GBP per annum, owned her own property and was looking to retire at the age of 65, a reasonable request as most people are hoping to retire at 65 if not significantly earlier.
At the time Mrs. R had a deferred group final salary pension with scheme benefits, a paid up personal pension valued at 25,297.48 and stakeholder pension plan that her current employer was paying into.
Mrs. R wanted to take a frozen pension and explore the idea of investing this into the alternative investment market by the way of an S.I.P.P which was when she was pointed in the direction of Bright Financial Partnership, the crooks of the complaint is quite simple and far too often the case, she is unhappy with the returns she received during her time with Bright Financial.
Mrs. R approached Bright Financial as requested of the advisor that her funds be invested into fractional ownership in Freedom Bay (this is very similar to timeshare).
This was an unregulated property investment scheme and as such the advisor explained that he would only recommend the transfer of funds into the scheme if they could conclude that this was suitable for her needs (this is what should happen), he also told her of the high-risk nature of the investment.
The risks contained within the investment were the fact that it was an illiquid investment and unregulated by the Financial Services Authority (now the FCA) which meant it may not be covered by the Financial Services Compensation Scheme (FSCS) in the event anything went wrong with the investment.
Mrs. R went against the best advice of the advisor and went ahead and invested into Freedom Bay, which eventually went bust, Mrs. R then approached the Financial Ombudsman Service with her complaint.
BFP rejected the complaint, the Ombudsman ruled against firm’s claims that Mrs. R had already made the decision decided to invest in St Lucia and it executed her wishes.
“I don’t think BFP could give Mrs. R advice about transferring to a Sipp without also advising her about the investment it knew she intended to make – fractional ownerships in Freedom Bay,” said ombudsman Lesley Stead in a final decision.
“BFP identified that the Freedom Bay investment was unregulated. And pointed out that, because of that, Mrs. R might not have recourse to this service or Financial Services Compensation Scheme if something went wrong. Unregulated investments are only likely to be suitable for more experienced or sophisticated investors. That’s why the promotion of such products is and was at the time restricted.”
FOS has now ordered BFP to pay the client the whole of the loss suffered as well as £300 for the trouble and upset Mrs. R has suffered.
Why you may ask was the complaint upheld if you are not familiar with best practice and the reason is this, if the company knew this investment was not in the best interest of Mrs. R that had the duty of care to outright flatly refuse to make the investment no matter what Mrs. R wanted, that is what they are there for to protect the client from themselves if need be.
If you like to know more about investment, visit DevDosh Ltd today.