A happy tale for the end of the week… not just one but two firms have been told they must compensate clients for poor advice on SIPPS transfers. A great victory against all firms using SIPPS to disguise their ill-advised pension scams sorry schemes.
Financial Planning today reported that:
The Financial Ombudsman Service has ruled against Portafina and Greystone Financial Services in two recent separate cases.
In both instances the clients were advised to invest in unregulated collective investment schemes (UCIS). These schemes are generally high risk and unsuitable for retail investments such as pension fund SIPPS. Both victims have suffered severe financial loss due to the UCIS their funds were invested in.
Mr P invested sums from his SIPP of £50,000 and two more of £20,000 into various funds before 2007 on the advice of Greystone. In May 2007 Greystone advised Mr P to invest £25,000 of his SIPP funds in the Rock Industrial UK Property fund and to also invest £25,000 in the Phoenix Spree Deutschland fund.
Mr P at 51 should have been a low risk investor, however he was encouraged to invest a high percentage of his SIPPS into the commercial property market. Greystone argued that the loss was not caused by the advice but by the unprecedented fall in the commercial property market.
The FOS told the firm it must put Mr P into the position he would probably now be in – or as closely as possible – if he had been given suitable advice.
With this case and many others now coming to prosecution, there is hope that there will be a reduction in firms advising their clients to invest in unregulated high-risk investments. In this case there is no mention of the ´fees´the firms applied to the investments they made, however it is safe to assume they would have applied a nice percentage to each investment, ensuring their pockets were well lined whilst the victim´s funds end with severe losses.
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As always, Pension Life would like to remind you that if you are planning to transfer any pension funds, make sure that you are transferring into a legitimate scheme. To find out how to avoid being scammed, please see our blog:
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