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Network to compensate over Sipp carbon credit investment

Network In Partnership must pay compensation to a client over a Sipp transfer to a carbon credit investment it did not do appropriate diligence for.

In the Financial Ombudsman Service ruling Mr T complains about the transfer of two pension plans to a new Sipp provider that resulted in most of his money being invested in carbon credits.

He says the transfers and the investment were not suitable and he has suffered financial loss as a result.

Mr T dealt with Smith Osborne Associates which, at the time, was an appointed representative of In Partnership.

The decision notes an unregulated introducer was involved in the transaction and had an arrangement with In Partnership’s adviser to carry out the transfer to the new Sipp.

It adds In Partnership did not do enough to protect Mr T knowing that an unregulated entity was involved in the process and the basis on which it acted was unclear.

Initially, In Partnership said it could not recommend the transaction and the investment in carbon credits was unsuitable for Mr T’s given level of risk.

This is shown in the client agreement Mr T signed in March 2012 where In Partnership did give advice and argued Mr T should not do what he planned.

However, Mr T signed another client agreement in April 2012, which said that In Partnership would not give advice or make a recommendation.

FOS says it seems In Partnership sought to change the basis on which it was acting – from advisory to non-advised/information basis and Mr T signed the second client agreement to reflect that.

In the provisional decision ombudsman Lesley Stead sided with the adjudicator and said In Partnership should have taken more care to ensure that its advice was clear and unambiguous.

That would have counterbalanced any overly positive view expressed by the unregulated introducer and meant any decision by Mr T to go ahead – despite In Partnership’s clear view he should not – would have been a properly informed decision.

In Partnership did not comment on the provisional decision in this case but did comment in response to other provisional decisions Stead has issued.

It has said there was no arrangement between In Partnership’s adviser and the unregulated introducer; the basis on which it had acted was clear as was the advice; several risk warnings were given and the consumer knew he was acting against advice.

In Partnership also suggested Stead wrongly relied on historic guidance and a fact sheet that post-dated events.

In the final decision Stead says she will uphold the complaint and orders In Partnership to compensate Mr T according to the method outlined.

A spokesman for In Partnership says: “We recognise and appreciate the difficulty that the FOS had in reaching this final decision.  We have accepted it for what it is.”



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There are 3 comments at the moment, we would love to hear your opinion too.

  1. I agree with the FOS decision on this one DRN9149077 (as I do with about 80% of FOS decisions) . For me the interesting thing is when the Ombudsman says “I haven’t seen anything to show that sort of discussion took place. There’s nothing to indicate Mr T’s reasons for not accepting the advice were explored in full and recorded”
    I truly believe that FOS complaints and advisers upsets would be drastically reduced if all client meetings were recorded as sound files and the advice delivered as verbal, not written as so many people DON’T read and act on the written word, they act on the spoken word and the trust they have of the person delivering it VERBALLY.

  2. If you facilitate it then you can be held as accountable (for it failing) as if you have advised on it, no matter what the client has signed. That is the world of today.

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