The Financial Ombudsman Service has upheld three complaints relating to Harlequin investments against adviser Allan McRoberts despite him blaming an unregulated agent for lost funds.
The clients were referred to McRoberts, who was trading as AM Wealth Management, by an unregulated agent for Harlequin.
The Harlequin group of companies marketed and built overseas luxury property developments and is under investigation by the Serious Fraud Office.
In each of the three cases, a disclaimer was signed stating that AM Wealth Management would only set up the Sipp and would not be involved in the advice or recommendation related to the property purchase.
The three clients paid their deposits for the properties through their Sipps in 2011. To date the investment properties have not been built and the FOS says it is likely the clients have lost the original investment.
The clients complained to AM Wealth Management in 2015 but the advice firm said it was not responsible for the decision to invest in Harlequin. It said the unregulated adviser should be held responsible as they provided the advice.
However, in one of the three final decision notices, ombudsman Benjamin Taylor says if the advice from AM Wealth Management was suitable the client would not have invested.
Taylor says: “I understand that AM feels it has been made a scapegoat and that the agent has walked away from this complaint without any liability whatsoever. The comparison between AM and the agent though isn’t a fair one.”
He adds: “The agent isn’t a regulated adviser. We have no jurisdiction over it. It is hugely significant that AM is. It brings a privilege to advise on pension transfers and gives responsibilities, duties and protections towards clients which an unregulated adviser doesn’t have. AM had a regulated duty to give suitable advice but didn’t.
“The argument that [the client] would have simply gone elsewhere and still have invested is misplaced. I don’t accept that Mr G would either have still invested, or gone to a different adviser for a different answer. If AM had given suitable advice it wouldn’t be dealing with this complaint.”
For each of the three clients AM Wealth Management must pay compensation based on calculations including finding the notional transfer value of the previous pension plan if it had not been transferred to the Sipp, paying a commercial value to buy the complainant’s share in the Harlequin property, and finding the transfer value of the Sipp at the date of the Fos decision.
It must also pay five years’ worth of future fees owed by the complainants to the Sipps and pay each of the clients £300 for trouble and upset caused.