The client, named only as Mr W, went to the FOS last year when PFP failed to respond to his complaint about the investments chosen when it was responsible for the management of his pension between 2012 and 2015.
The ombudsman backed him, stating the funds chosen by PFP were not suitable for an investor such as Mr W who was established as having a “conservative approach” to investments with an emphasis on capital preservation and low volatility.
PFP was acquired by Ascot Lloyd in 2015.
Risky exposure
“I don’t think Mr W wanted to take the level of risk that the funds recommended by PFP exposed his pension fund to,” ombudsman Lesley Stead said.
“PFP didn’t invest Mr W’s pension fund in line with his attitude to risk and his stated requirements. I don’t think the funds selected by PFP for Mr W’s pension were suitable.”
PFP invested 50% of Mr W’s pension across uncorrelated and real asset funds, the latter specialising in bullion and precious metals.
Fund value plummets
The value of two funds chosen, the BlackRock Gold and General and the Central Fund of Canada, fell nearly 50% in the first year and struggled to recover in the second.
An initial investigation found Mr W was able to take a small amount of risk but “didn’t want to expose his pension to the level of risk represented by the funds that PFP selected”.
In response, PFP said it didn’t agree with the points made by the original investigator and added it was considering making an offer to resolve the complaint.
However, the FOS said it heard nothing more from the firm.
“We haven’t heard further from PFP. No offer has been forthcoming. Nor has PFP clarified what points made by the adjudicator whether about the merits of the complaint or the adjudicator’s suggested redress method – it didn’t agree with,” the FOS report stated.
The FOS ruled PFP should compensate Mr W for any losses incurred, adding it did not believe he would have invested in the BlackRock and Canadian funds were it not for PFP’s recommendation.
