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Caerus to compensate over Ucis investment

The Financial Ombudsman Service has upheld a complaint against Caerus from a client who lost money after he transferred £50,000 into a suspended unregulated collective investment scheme.

The Fos ruling says Caerus, which was acquired by Quilter-owned network Intrinsic in 2017, is responsible for the unsuitable advice its appointed representative, Matrix Wealth Consultancy, gave to Mr J in early 2012.

During 2011 Mr J had a series of meetings with Mr C of Matrix to discuss making changes to investments held in his self-invested personal pension.

He wanted to move away from property, reduce the overall level of risk and make arrangements easier to manage because his wife was ill.

Mr C recommended selling a number of funds in the Sipp and placing the proceeds into a Ucis called the Axiom Legal Financing Fund.

At that time, Mr C was an appointed representative of a different business and Mr J made an initial investment in Axiom in October 2011.

This earlier advice is the subject of a separate complaint but in 2012 Mr J sold several more funds he held in his Sipp and made a second Axiom investment of £50,000.

By this time Mr C, through Matrix Wealth Consultancy, had become an appointed representative of Caerus and it is this second investment that is the subject of this complaint.

In October 2012 the Axiom fund was suspended and Mr J realised his investment was not as low risk as he had been led to believe by Mr C and he complained about the advice.

Caerus argued Mr J’s complaint could not be looked at by FOS and said Matrix, as its appointed representative, was not permitted to give advice on Ucis, such as the Axiom fund.

Therefore, Mr C had acted outside his agreement with Caerus and it could not accept responsibility for Matrix carrying on this type of business.

The FOS adjudicator agreed with Caerus and said it could not look at Mr J’s complaint.

The case was referred to ombudsman Doug Mansell who had to determine if the complaint fell in FOS’s jurisdiction.

Mansell was satisfied Matrix was directly involved in at least making arrangements for the second disinvestment from Mr J’s Sipp and the further investment in the Axiom fund.

The advice to sell the existing Sipp investments and the advice to then buy into the Axiom fund were both regulated activities.

Mansell also said Caerus provided FOS with a copy of its appointed representative agreement which explains Caerus “accepts full responsibility for anything said or done or omitted by the representative in carrying on the relevant activities”.

Mansell says in the decision: “It seems clear to me that Caerus authorised Matrix to advise clients on selling investments.”

He says the advice given to Mr J was not suitable, particularly given the amount involved.

To compensate Mr J, Caerus must compare the performance of Mr J’s investment with that of the designated benchmark and pay the difference between the fair value and the actual value of the investment.

It should also pay Mr J £250 for the trouble and upset he has been caused as a result of the unsuitable advice.

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  1. Principals are responsible for their appointed representatives even if they act outside their contractual obligations. The Network/Principal is meant to monitor their activities and reign them in if they do something like recommend a UCIS when they are not supposed to. Sadly that’s the danger of having appointed representatives!

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