Firm to pay compensation after advising client to invest in unregulated Brazilian property scheme
A client is to receive compensation after a financial advice firm advised them to invest into a unregulated Brazilian property scheme.
Last week the Financial Ombudsman Service (FOS) stated that an advice firm must compensate a client after it advised them to invest into Brazilian property scheme, Whitesands Brazilian Project.
The properties involved in the scheme do not actually exist and the investment was both high risk and unregulated.
The client – known as Miss D by the FOS – said she was given unsuitable advice by specialist pensions firm Heather Dunne IFA, an appointed representative of Financial Solutions Midhurst Limited (FSML).
Miss D was advised to transfer her occupational pension scheme (OPS) and personal pensions to a self-invested personal pension (SIPP).
Brazilian Properties didn’t exist
Reports suggest that the Whitesands Brazilian Project never went past the initial architectural plans. The scheme took £14m from investors like Miss D, and apparently used the former Manchester United footballer, Lee Sharpe, to market it.
In January 2013, £86,118 from Miss D was transferred into Whitesands. Four years later in 2016, with no returns on the investment, Miss D complained that the SIPP was not suitable, and her funds were misused. She argued that Financial Solutions Midhurst Limited failed to undertake due diligence in respect to the “unregulated introducer and the unregulated investment. Financial Solutions Midhurst Limited disagreed with this and she was referred to the Financial Ombudsman.
FMSL fell short with regards to advice
The FOS stated that, although the pension questionnaire that Miss D filled out went someway to establishing her risk attitude, FMSL fell short in terms of establishing her wider circumstances.
The FOS stated:
Among other things, FSML had to know its client, act in her best interest and give suitable advice.
I have not seen anything that would indicate Miss D was an experiences investor or that she could afford to take significant risk with her pensions.
This initial decision was upheld in April this year, with the FOS stating that Miss D should be put back into the position she would have been in had the advice been suitable.
How can Smooth Commercial Law help?
Does this story sound familiar to you?
At Smooth Commercial Law, our team of experts have experience in dealing with a whole manner of claims that arise from negligent and/or unsuitable financial advice, including unsuitable transfers from pensions. We are seeing an increase in claims for mis-sold pensions and unsuitable investments, and have managed to secure compensation for many of our clients.
Should you have a claim for negligent financial advice, we can deal with your case and look to recover compensation for not just your loss of investment but also any adverse tax liabilities that you may now be facing as well.