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FOS rules against 3 IFAs who sold Stirling Mortimer funds


The Financial Ombudsman Service has issued one final decision and two provisional decisions against IFAs who advised on the Stirling Mortimer Ucis investments.

All three decisions relate to investors who were advised to put money in the Stirling Mortimer No.4 Cape Verde fund.

The final decision, issued on 6 September, involved a 54-year-old widow who was advised to invest £100,000 with Stirling Mortimer. The ombudsman said the investor was led to believe the investments carried little or no risk by her adviser. The decision suggests the investment has no value with a fulll payout and the IFA keeping the rights to any residual assets.

The first provisional decision, made on 5 September, involves a 44-year-old who was advised to invest his £50,000 pension pot in the Stirling Mortimer fund using a Sipp. The ombudsman said the adviser failed to conduct a credible assessment of the client’s attitude to risk.

The second provisional decision, dated 6 September, involves a 79-year-old man whose adviser suggested he invest £25,000 in the fund. The ombudsman said the advice given was unsuitable for the client’s needs and requirements.

Law firm Regulatory Legal represented the three clients. Director Gareth Fatchett says: “We believe there has been wholesale misselling of the Sterling Mortimer funds.”


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There are 21 comments at the moment, we would love to hear your opinion too.

  1. These cases sound poor advice no doubt but to see such a sweeping statement from RL “We believe there has been wholesale misselling of the Sterling Mortimer funds.””

    Substitute Herbert Smith for RL and Keydata for Sterling Mortimer and you get the same generalisation

    Also I just wish HS were allowing the FOS (or someone) to look at each Keydata case on its own merits…

  2. This is just simply not news but an advert for Regulatory Legal.

    My practice acted for two clients and secured ombudsman’s decisions and redress some twelve months ago for Sterling Mortimer investments. I am sure there are others who have done similar and not felt the need to advertise it.

    The continual press releases from RL are getting a bit boring now. Can they keep quiet until they have really achieved something which does not happen elsewhere in the industry on a daily basis.

  3. Neil F Liversidge 13th September 2012 at 9:28 am

    Another big bullet dodged! Went to their presentation in Leeds, didn’t smell right, didn’t do it. Aren’t I glad.

  4. Incompetent Regulators Award Team 13th September 2012 at 9:42 am

    Before we hang the IFAs, I would like to check the cases myself. As the FOS has a very bad record at decisions and always normally in favour of clients.

    FOS is flawed with flawed staff.

  5. The decisions in these cases suggest that the firms involved did not assess the mandatory assessment of the clients’ experience and suitability for investment in UCIS.

    Quite simply, the nature of the investment is irrelevant – either there is substantive evidence on the file that the client meets the criteria for UCIS and understands/accepts the risk/absence of compensation, or the firm is liable for any loss.

    I fear that the next few years will see a whirlwind of UCIS claims, due to firms’ failure to correctly assess clients’ eligibility for UCIS, due to an ignorance of the regulatory obligations.

    No doubt our esteemed regulatory will take full advantage of this opportunity, and the ambulance chasers will jump on this bandwagon.

  6. No doubt Regulatory Legal charged a success fee to act for the client when they would have paid nothing had they gone to FOS directly!

  7. The legislation is in place to make final decisions public, which should provide more scrutiny.

    I suspect Incompetent Regulators Award Team is mixing up adjudications and decisions. I couldn’t agree that FOS is normally in favour of the consumer…. it tends to be that one side assumes that FOS is in favour of the other which in itself is a succesful measure of impartiality.

    I also suspect that Incompetent Regulators Award Team has had a couple of adjudications/decisions go against him/her. Maybe publish these via MM and be judged by your peers? On the face of it, the detail provided in this article does not make me lose sleep that judgements went in favour of the consumer.

    FOS is flawed, but no one has come up with a suitable replacement that meets all requirements (as far as I am aware). My personal view would be FOS broadly works, but there should be a higher number of free cases (I’d like to see anything up to 50). I’d also like to see profit based representatives pay a FOS levy as part of their registration.

    Note to MM – It would have been more informative if there was attempt to get the advisors side of the story. Otherwise this smacks of giving airtime to an organisation that appears to be drumming up future business.

  8. All,

    I have redacted copies of the FOS decisions on .

    I suspect after you have read them you will see that the FSA recent pronouncement on UCIS sales is being followed by FOS.

    That said, anyone advising UCIS as low risk / safe cannot seriously believe it.

  9. There is an interesting case set-aside in the High Court Manchester # 1MA40045 in which Tim CLINK, director of Stirling Mortimer, has pleaded that his own IFA firm, Stirling Associates independantly advised somebody to invest based in a Suitability Report by a J CLINK. If J CLINK and T CLINK run the IFA firm, and T CLINK runs the fund, how could that ever have been INDEPENDANT financial advice?

  10. RegulatorSaurusRex 13th September 2012 at 5:35 pm

    Some advisers have concentrated on the “Unregulated” element of UCIS, daft beggars.

  11. The issue is not whether a UCIS is low risk or safe as houses, but that these unregulated products simply cannot be recommended compliantly to clients unless there is sufficient, objective evidence to demonstrate that a client has the required knowledge and experience.

    Where a firm falls under MiFID, a more quantitive test applies, which effectively limits participation to professional investors with at least €500,000 and previously high volumes of investment in similar funds.

    Quite frankly, the answer to, “Should I consider recommending UCIS to retail clients” is “No!”.

  12. It would rather frightening if anyone thought that UCIS were not subject to regulation!

    If so, they better start planning to sell their houses and take up a career in selling double-glazing …..

  13. My reaction to Stirling Mortimer’s flash-harry roadshow presentation in Bristol was exactly the same as that of Neil Liversidge, not least because one of its supposedly attractive features (to those present) was that the schemes were “unregulated”. That alone set off warning bells in my mind.

    I’ll bet these three IFAs’ PI insurers don’t want to know about these verdicts either, so that’ll probably mean another three who won’t be with us come 2013.

  14. As far as I am aware, that fund consists of shares quoted on the Chamnnel Islands Stock Exchange. If correct, then it cannot be a UCIS as shares do not constitute a collective investment scheme (whether regulated or not).

  15. @ Anon 14 Sep 6.48

    Based on your ill-informed presumption, neither OEICS or ETFs would qualify as collective investment schemes; as they have shares and ETFs are quoted on RIEs.

    For the avoidance of doubt, these funds are UCIS for the purposes of regulated activity in the UK.

  16. Rebus Fortissimus 17th September 2012 at 7:25 am

    I see all sort of examples of people who A. shouldn’t be in the same room as these sorts of advisers, B. shouldn’t be within earshot of anything that has ‘complex and ‘investment’ in the same sentence and C. have talked to at least 3 ‘friends’ before A. and B. happened who knew well enough to keep them out of the way. It’s exploitation of the worst kind, driven simply by greed and a lack of any sort of duty of care. The consequences are truly awful in many cases and there is zero for the advisers to hide behind, so it’s hugely encouraging seeing justice being done.

  17. I was advised to invest into Stirling Mortimor Ltd Cape Verde No 4 and into Majestic Village No 3 fund. At the moment I am £200,000 down and my IFA (Wayne Tandy) has put the police onto me for harassment Cannot get any information as the IFA will not talk to me

  18. Its very frightening but true that some advisers did think that as the product was unregulated they didnt need to worry about the fact they were giving regulated advice.

    Mind you a lot of the promoters of these funds did imply to advisers that they as they were unregulated it didnt matter.

    Richard have you actually contacted the FOS?

  19. FOS is Your Friend 5th December 2012 at 1:50 pm

    Dear Richard

    Have you referred your complaint to the Financial Ombudsman Service. The investments may have been unregulated but the advice to enter them is regulated and FOS will review the adivce you were given.

    If you are unsure, Google FOS and refer your complaint to them.

  20. Stirling Mortimer schemes themselves, in their literature, offer a total loss of invested money as an outcome. What IFA, acting properly, could ever produce a correct written advice to anyone to invest in such a total loss scheme, that can merely keep the money forever and never pay back?

    And if the answer is none whatsoever, and if no panel of 12 ordinary people could ever come to any other conclusion, then wouldn’t we, theoretically at best, be necessarily looking at a nationwide fraud, where some deception must have been necessary in order to obtain people’s pensions and savings money into the scheme?

    There is around £100 million disappeared into Stirling Mortimer schemes, which can simply never be repaid. So how, under any circumstances, could any IFA rightfully have ever, under any circumstances, produced a written report to recommend such a scheme to any client?

    The question I pose, is what precisely is (or could ever be) the or any honest sales pitch of an IFA of a scheme to a client, when the scheme can simply keep the money forever (as Stirling Mortimer can) and simply never repay a penny?

  21. My mother has invested £100K in this fund on the advice of an IFA. Without going into too much detail, she has now written to the FOS as the IFA stands by his advice. If FOS find in favour of my mother, how am i best to help her with financial redress? Is this through his PI cover? Should he have placed them on notice already? Any assistance would be appreciated. My mother is at her wits end with this.

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