A former Financial Ltd adviser has failed to pay around £500,000 in compensation to clients after recommending they buy into an unregulated collective investment scheme investing in waste and recycling.
The Sunday Times reports MFS Partnership partner Paul Herd owes David and Sheila Solomon a total of £497,177 after a Financial Ombudsman Service decision ruled Herd had given poor advice.
Six months after the ruling, no payment has been made.
In 2010 Herd recommended the clients transfer their pension pots into a Sipp with LV=, into an Isle of Man-based investment called the New Earth Solutions Recycling fund.
LV= wrote to Herd’s then network Financial Ltd raising concerns about the investment, and in turn Financial Ltd wrote to the Solomons in July 2011 saying it “had some concerns over the advice provided based on the documentation we have seen”.
But Herd had already written to the clients advising them to disregard any warning from Financial Ltd.
In his letter in April 2011, he wrote: “I am of the opinion that this fund remains completely suitable for you and should be held for at least another three to five years.
“Financial Ltd may invite you to unwind your investment and you should be mindful that this may entail early surrender penalties.
“I suggest that in these circumstances you simply telephone or put in writing your desire to continue with the investment, that you understand the risk involved with the fund and are happy with my advice.”
Investors in the New Earth have been prevented from redemptions since November 2013, and the fund went into administration in June this year.
Administrators Deloitte say: “There appears to be little prospect of any meaningful recovery from the fund’s investments.”
Herd declined to comment to the newspaper.