An advice firm must pay redress to a client it advised to give up a guaranteed cash sum and annuity rate, transfer into Sipp and invest in illiquid storage units.
The client, Mr F, had a pension worth just over £50,000 and told the advice firm – Anthony William Morrin – that he wanted to invest a significant proportion of his portfolio into “cautious assets”.
He was advised to to transfer his pension plan to a Sipp and invest £22,500 in Store First and £28,754 into the Vanguard Balanced Fund. The adviser did not set out the guarantees lost upon transfer in the suitability report.
The transfers later lost the client money and his complaint was referred to the Financial Ombudsman Service.
In its final report the FOS says the advice to transfer the pension out of a plan that had a guaranteed cash sum and guaranteed annuity rates was inappropriate and that Anthony William Morrin did not explain these would be lost on transfer.
The ombudsman also says the advice to invest in Store First was inappropriate because returns were not guaranteed and there was a liquidity risk.
Ombudsman Adrian Hudson says: “If Mr F wished to go ahead and invest in the Store Pods he should have been asked to sign an insistent client agreement confirming that he knew what the loss of the GAR would mean and that the Store Pods could be difficult to realise if he wished to sell them.”
Hudson says Mr F should be put back into the position he would be in if he had not transferred his pension plan.
However, he did recognise there may be an issue selling the Store First investment and ordered Anthony William Morrin to buy the asset itself if this is the case.
According to the FCA register, the advice firm has applied to cancel its authorisation.