FOS orders refund of monthly fees to Arch cru investor

Money-Notes-Currency-GBP-Pounds-700.jpgThe Financial Ombudsman Service has ordered Financial Services Advice and Support to refund a client more than two and a half years’ worth of monthly charges for “keeping an eye” on his Sipp investments.

The customer, ‘Mr M’, complained to the FOS about advice from Financial Dimensions, an appointed representative of FSAS, to transfer his existing pensions into a new plan and to invest in Arch Cru.

As well as the pensions advice, Mr M started paying Financial Dimensions £25 per month from his bank account which was additional to the commission it received from the Sipp provider.

Ombudsman Lesley Stead says in the decision: “Mr M said that the adviser at the time told him the £25 was to reward him for the additional work needed to keep an eye on the performance of the Sipp investments.”

Financial Dimensions contested there was no evidence the £25 charge was connected to the Sipp. Stead ordered FSAS to refund all of the monthly payments plus 8 per cent interest.

She says: “The agency was transferred to the current firm in January 2005. So logically any renewal commission or fees agreement for servicing existing plans would have started from then, not March 2006.”

“I would have also expected any agreement about the £25 fee to be recorded and on file. I don’t see any reason not to accept what Mr M’s said about the matter. The payments coincided with the setting up of the Sipp. That points to them being directly linked to the Sipp.”

The FOS decided it could not look into the complaint invested in Arch Cru because the complaint was not made in time. However, it said the advice to transfer to a Sipp was unsuitable.

The FOS decision says: “I do understand the difficulty caused by the Arch cru investment which means that the Sipp can’t be wound up now. And there’s uncertainty as to how long that situation will remain.”

It adds: “But I think we do need to bring the matter to an end so that both parties have some closure on the matter. I think what’s been proposed – to allow a two year period during which time I’d hope the Arch cru position would have been resolved – is fair and reasonable.”