The Financial Ombudsman Service ruling against against Sussex Independent Financial Advisers Limited relates to a client who, in 2009, invested her entire pension into a Sipp with another firm referred to as Firm G, which invested most of the money into the Caribbean scheme Harlequin.
In total the victim “Mrs S” invested £91,500 into the Sipp which put most of the money into Harlequin that subsequently encountered difficulties.
Sussex argued Mrs S had her mind made up by a third party to invest in Harlequin and Sussex were only advising on the set up of the Sipp.
However, the ombudsman said Mrs S was close to retirement, was only prepared to take moderate risk and Sussex had a duty to consider the suitability of both the Sipp and how it was going to invested.
Compensation
Upholding the complaint ombudsman Terry Connor ordered Sussex to calculate fair compensation by comparing the value of Mrs S’s pension, if she hadn’t transferred, with the current value of her Sipp.
Sussex must buy out Harlequin investment share and top up the Sipp as if it had not been transferred into the Sipp – taking into account any available tax relief and the effect of charges.
In addition, Sussex should pay five years’ worth of future fees owed by Mrs S to the Sipp.
Establish how much Mrs S has paid into the Sipp as net ad hoc lump sum and regular monthly contributions and add interest to each contribution at 8% simple gross per annum from the date each contribution was made to the date of the ombudsman’s decision.
The total interest should then have 20% income tax deducted. The total net interest is then added to the total of net contributions made.
Sussex were told this total sum should be paid in cash to Mrs S and include £250 in compensation.
