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Tenet ordered to compensate non-advised golf course investors

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TenetConnect has been ordered to pay compensation to a group of clients after the Financial Ombudsman Service ruled the firm had failed in its duty of care to clients making investments on a non-advised basis.

The FOS ruled that Tenet was wrong to help clients in 2010 to open new Sipp accounts to invest in an unregulated scheme to invest in a golf course in Spain, without giving them advice.

The firm’s clients transferred all their pension savings into property investments through Resina Golf Limited in Spain, only to find later that they actually owned land adjacent to the golf course.

While Tenet claimed the investments were unregulated, and that clients had invested on an execution-only basis, the FOS ruled that Tenet should have warned the clients about the scheme being an unsuitable investment.

The consumer watchdog argued that Tenet had been aware the clients were opening the Sipps only to facilitate the golf course investments, and that the investments and the Sipps were, therefore, linked.

In particular, the FOS noted that in January 2013 it had issued a regulatory alert raising concerns about firms giving advice to set up Sipps without considering the investments that the accounts would be used for.

In his decision notice, ombudsman Terry O’Connor said: “In my view, the alert only reinforces the existing duties placed on advisers by the rules and the regulatory principles. So TenetConnect should have considered the suitability of the investments given that it knew the only purpose of the Sipp was to invest in the golf course.

“An adviser cannot avoid its duty to give suitable advice by limiting the scope of the advice it will provide.

“TenetConnect knew that monies transferred into the Sipp would then be invested into a Ucis. This was, therefore, a connected transaction for regulatory purposes and should have been treated by TenetConnect as such.

“I am not persuaded the transfer and the Sipp opening were in reality on an execution only-basis. I accept TenetConnect’s point that they gave no advice. But in my view, they should have given advice.”

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Comments

There are 7 comments at the moment, we would love to hear your opinion too.

  1. Philip Milton 6th May 2016 at 10:13 am

    Another case of stupid people being compensated for their stupidity & more encouraged to go off and do it all again. So where exactly does the duty of care fall… No defence to the company to many extents but something just not right in the regulatory process here. If the host institution ‘meant’ to check every single last investment to ensure it is ‘appropriate’ for a customer over which it has no involvement or detailed knowledge? And the fraudsters – they are the ones who should have been ‘caught’ and anyone along the process who aided and abetted from accountants, sponsors to solicitors etc for what seems to have been a clear scam from the start.

  2. Julian Stevens 6th May 2016 at 10:58 am

    My experience of Tenet is that they’re very careful about matters such as Exec Only and Non-Advised transactions and that they have a lot of very knowledgeable people in their compliance department.

    But, it seems, no matter WHAT you do to ensure that your client understands and accepts that he’s making his own investment choices without any advice and signs all relevant indemnities, if an FOS adjudicator decrees, effectively, that there’s no such thing as Exec Only/Non-Advised business without liability on the intermediary, we may as well from now on declare simply and bluntly that we won’t undertake it for anyone under any circumstances. Whether or not you want to Mr Client, you’ll have to pay for full advice or DIY.

  3. It is irresponsible and foolhardy for any regulated adviser firm to facilitate these sorts of Investments.
    As soon as Tenet went down the non advised route they are bagged as culpable.It is patently obvious they ticked it off as non advised in an attempt to avoid responsibility on the end target Investment which they must have known about. They were therefore very much connected to the whole transaction. This is a win for the consumer and a message to the regulated adviser market that if you were the badge of “regulated” stop attempting to abdicate from regulation.

  4. I’m not sure I get the comment about limiting the scope of advice.
    If a client wants to pay for advice specifically on issue A, but doesn’t want to pay for advice on issues B, C, D etc….then on what basis is the professional adviser (solicitor, accountant, doctor etc) able to be deemed liable?
    Obviously the specific facts of each scenario will impact, but it’s the underlying principle that needs clarifying

  5. Quote from the Ombudsman in one of the four decisions involved:

    “I accept TenetConnect’s argument that they gave no advice. But in my view they should have given advice”

    And it’s the Ombudsman’s view that matters.

    • I think this is the most important part of the article. Reading between the lines, there is no way to avoid giving advice (execution only, insistant etc) if an ombudsman thinks you should have given it.

  6. So bang goes the insistent client argument!! I really don’t think the FCA and FOS are on the same page, much as they would like to believe the notion and this decision shows it!

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