The Financial Ombudsman Service has issued several preliminary decisions in favour of three claimants who invested more than £36,000 into the Ethical Forestry scheme through Liberty Sipp.
The investments were made after being approached by introducer Avacade, which cold called the clients and discussed moving their pensions with them.
The FOS adjudicator finds Liberty Sipp breached duty of care to clients because it ought to have known “there was a high chance that a lot, if not all, of the business introduced by Avacade, would contain a high risk of significant consumer detriment”.
Therefore it was not “fair or reasonable for Liberty to have accepted [the clients’] applications on the basis and manner proposed”.
The individuals are being represented by solicitors Anthony Philip James & Co, which says it has another 500 similar cases lodged with FOS against Liberty Sipp for clients, with a combined value of more than £18m.
APJ financial mis-selling solicitor Glyn Taylor says he is delighted the FOS has recognised Liberty Sipp had a responsibility to carry out due diligence on the business it accepted from Avacade.
Taylor argues Liberty Sipp should be liable for client losses as it agreed to accept such a large amount of questionable business from Avacade.
Liberty Sipp now has an opportunity to appeal the preliminary decisions but Taylor says he is confident the FOS will issue similar decisions on behalf of more clients.
A FOS spokeswoman notes: “Consumers don’t need to use an intermediary to bring a complaint to us. They can come to us directly, and our service is free.”
Liberty Sipp was not available for comment at the time of publication.