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Intrinsic compensates client over Sipp investments in overseas plantations

Network Intrinsic has been ordered to pay compensation over the advice its appointed representative gave to invest in two overseas ethical plantation schemes.

In a Financial Ombudsman Service ruling, Mrs R complained about the advice she says she received from the ER Network, an appointed representative of Intrinsic.

Mrs R says she was given unsuitable advice to transfer her pension into a Sipp and invest in the Sustainable AgroEnergy and Belem Sky Plantation schemes.

The provisional decision sets out the background to the case and says it is likely Mr M acting for ER did advise Mrs R to transfer her existing pension arrangements into a Sipp.

There is also evidence ER sent the application form to the Sipp provider and so was responsible for arranging the investments.

Both giving financial advice and arranging an investment are regulated activities and these were activities for which Intrinsic accepted responsibility.

Therefore advice to invest in Sustainable AgroEnergy and Belem within the Sipp was inherently linked to the advice to transfer into it, FOS ruled.

ER was authorised by Intrinsic to give advice on pensions and accordingly, Intrinsic is responsible for the advice as a whole, including investing in Sustainable AgroEnergy and Belem.

Mrs R made further points that she never owned a buy-to-let property, was never aware the Sipp provider used was not on Intrinsic’s panel despite having used Intrinsic for advice over a number of years.

She added she was not an experienced investor – contrary to Intrinsic’s statements about her having knowledge through her job.

In his decision ombudsman Doug Mansell sides with Mrs R and says the redress calculation should compare the current value of Mrs R’s Sipp to the value of her previously held pension, had it remained with the same provider in the same funds.

He says Instrinsic should obtain the notional transfer value of Mrs R’s previous pension plan, if it had not been transferred and the actual transfer value of Mrs R’s Sipp, including any outstanding charges.

Then it should pay an amount into Mrs R’s Sipp equal to the value calculated and this payment should take account of any available tax relief and the effect of charges.

In addition, Intrinsic should pay five years’ worth of future fees owed by Mrs R to the Sipp and pay £300 for the trouble caused.

Intrinsic declined to comment.

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Comments

There are 5 comments at the moment, we would love to hear your opinion too.

  1. There is an emerging pattern here…..

    The Carey verdict should speed up the avalanche

    • It’s certainly going to make interesting reading based on what the BB judgment has just said. I suspect there is going to be a serious reduction in the number of SIPP providers which is as it should be as the majority of retail clients should NOT have a SIPP and have never had a need for them.
      SIPPs always should have been the exception rather than the rule.

      • Quite. Why ever did the ER Network recommend such investments, particularly via a SIPP that wasn’t even on Intrinsic’s approved panel? And, given that the complaint went to the FOS, on what basis could Intrinsic have possibly sought to reject it?

        The FCA’s position is clear ~ UCIS (and similar) are complex, high risk, commonly illiquid and are highly unlikely to be suitable for (at least) 90% of investors. I have no argument with such a position.

        • Probably the same as most of these esoteric investments that are SIPP held, I would imagine the adviser was approached by the client who was ‘sold’ the idea of the investments by some sales outfit somewhere else. The adviser thought they were advising on a suitable SIPP wrapper (which would be off-panel), and unbeknown to them these compensation claims have seen that the adviser is responsible for the investment even if they didn’t advise on it. Essentially sounds like an insistent client ‘type’ case’. In the past I was approached by a solicitor who had a client selling plots of land in Florida; the agents essentially sold the clients the plots saying use your pension fund! I declined to provide the SIPP advise to circa 100 individuals as it didn’t feel right and clearly the legislation is putting far more responsibility on the adviser than perhaps some thought. Essentially product and investment are treated the same.

  2. It would be nice to think that the ethical operators now hold their hands up and treat their misadministered clients fairly however this is unlikely based on the fact they abused them in the first place for easy fees

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