UK advice firm Consumer Wealth has gone into liquidation after the Financial Ombudsman Service (FOS) received complaints about the business.
So far, there has been only one complaint against the firm upheld by the FOS, which was published in December. But the FOS has confirmed to International Adviser, it “received 13 complaints about Consumer Wealth in this financial year”.
According to Companies House, Consumer Wealth went into voluntary liquidation on 18 December 2018.
It was authorised to advise on investments for retail clients, with the exception of pension transfers and pension opt outs.
The firm has appointed RSM Restructuring as administrators.
Consumer Wealth’s website appears to have been taken down.
Investing heavily in two funds
The one case that has been reviewed by an ombudsman was from an individual known as Mr F, who complained that his self-invested personal pension (Sipp) was heavily invest in a high-risk fund run by Greyfriars Asset Management (GAM).
According to the complaint, Consumer Wealth recommended he invest 49% of the Sipp into an equity fund and 49% into the GAM Portfolio Six fund.
The remaining 2% was held in cash.
Greyfriars, which is based in Leicester, has also experienced its fair share of regulatory difficulties, having appointed administrators Smith & Williamson in October 2018 to sell part of its business.
The firm was barred by the FCA from accepting new money into Portfolio Six at the end of 2016; and, the following year, was banned from accepting any new client money across its regulated businesses.
The firm’s discretionary fund manager (DFM) business began to wind down in 2017 and is no longer active.
Greyfriars is currently authorised, according to the FCA website, but is listed as in administration.
Niche investments
The ombudsman, Keith Taylor, found that the Portfolio Six fund invested in areas such as overseas hotel rooms, property development of grade listed buildings in Germany and the development of a waste treatment and energy recovery facility in Wales.
He said: “These niche investments offer relatively high returns, which generally is an indicator of the underlying investment risk.
“These investments were also unregulated, and I wouldn’t expect to see this proportion of a pension fund invested like this.
“So whilst the investments had been amalgamated into a single fund, I don’t think it makes it suitable to investment virtually half of Mr F’s pension in a fund like this.”
It is likely that the other complaints relate to similar issues.
