The IFA has been declared default by the Financial Services Compensation Scheme after pension compensation claims mounted.
A Wrexham-based IFA who was facing millions in pension compensation claims has been declared default by the Financial Services Compensation Scheme (FSCS). The FSCS declares a finance firm in default when it has received at least once eligible claim against it and is satisfied the firm will not be able to pay it.
Kingsway Wealth Management found itself in hot water in relation to self-invested personal pension (SIPP) claims. The news that they have been declared default now potentially paves the way for its former clients to receive compensation from the FSCS.
The Financial Ombudsman Service (FOS) had already ordered Kingsway Wealth Management to pay out £327,000 in relation to previous pension advice it had given. The Wrexham firm argued that responsibility for the losses should also be shared with their clients and the SIPP providers.
Who were Kingsway Wealth Management?
Kingsway Wealth Management was a firm of financial advisers who offered financial services to their clients, including pensions and retirement planning. The firm hit the headlines after a number of complaints arose in relation to their service in between February 2014 and June 2019.
Nine cases were upheld by the FOS. All nine of these were related to SIPP transfers, where Kingsway failed to conduct the appropriate due diligence in relation to whether the investments were suitable for their clients.
An example of this was in February 2018, where the FOS ordered Kingsway Wealth Management to compensate a client who invested his pension into residential apartments in Limassol, Cyprus.
Kingsway Wealth Management entered administration in December 2019. Administrators detailed a further 24 cases of this nature which had been referred to the ombudsman. Many of these cases are still outstanding.
With the FSCS declaring the firm default, any outstanding claims with the FOS can potentially be passed onto the FSCS, which is good news for investors. The scheme can compensate clients if a financial firm is unable to, with a maximum pay-out of £85,000 on individual investment claims.
The FSCS has already this year warned of a growing number of “more complex and more expensive” pension claims pushing up the regulatory levy it charges. The trend of mis-sold SIPP claims seems to be continuing on an upward trajectory.
How can Smooth Commercial Law help?
At Smooth Commercial Law, our team of experts have extensive experience in dealing with a whole manner of claims that arise from negligent and/or unsuitable financial advice. We are seeing an increase in claims for mis-sold pensions and SIPPs, and have managed to secure compensation for many of our clients.
Should you have a claim against Kingsway Wealth Management, 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.