A lack of due diligence has been highlighted as a key factor in upholding a claim against troubled Self-Invested Personal Pension (SIPP) provider, Rowanmoor, in turn paving the way for hundreds of potential claims waiting in the wings.
The Financial Ombudsman Service (FOS) has issued a 63-page decision against Rowanmoor, following the investigation of a ‘sample case’ involving a complainant, Mr T.
The case related to an occupational pension transfer which was referred to Rowanmoor by an introducer firm, CIB Life and Pensions Ltd (CIB). Mr T lost his pension savings in an unregulated offshore property deal involving The Resort Group. FOS found that Rowanmoor had failed to verify the integrity of the firm that introduced Mr T.
While Rowanmoor could not be held responsible for the financial advice given to Mr T, it came to light that they were already aware of potential issues with CIB and should have carried out more thorough checks and asked for suitability reports to protect its customers. Introductions from CIB accounted for over a quarter of Rowanmoor’s total business between 2009 and 2013.
CIB did not provide financial advice and told the Ombudsman that they pointed this out to prospective customers before passing them on to Rowanmoor. Customers were asked to sign papers saying that they had obtained their own independent financial and legal advice. Rowanmoor argued that they were in an ‘execution-only’ relationship with CIB, in turn avoiding any official need for them to offer their own advice or follow regulatory obligations.
But FOS disagreed, saying that strict principles set out by the Government watchdog, the Financial Conduct Authority (FCA) should have been followed. Under FCA rules, financial firms must demonstrate due skill, care and diligence, they must have risk management systems in place, they must take the best interests of customers into account and treat them fairly.
FOS found that Rowanmoor should have asked CIB more about how they got in touch with customers, what information was available about the investments, who else was involved in the process and what regulated financial advice had been given. This due diligence would have flagged up potential problems and led Rowanmoor to question whether they could accept business from CIB. It would also have allowed them to assess to what extent going ahead with the investments would affect their customers’ financial security.
The Ombudsman concluded that above all else, Rowanmoor did not treat Mr T fairly and therefore should compensate him for his financial losses.
As well as ongoing FOS investigations, CIB and The Resort Group are well known to the Government-backed lifeboat scheme, the Financial Services Compensation Scheme (FSCS) now has over 1000 cases registered with them. Mr T’s case opens the door for other investors to make compensation claims as a result of unsuitable investment advice.
Sarah Spruce, Head of Professional Negligence at TLW Solicitors said:
“The Financial Ombudsman’s lengthy and detailed decision in Mr T’s case highlights a much bigger issue in the pensions industry. Regulated industries, like financial services, must abide by rules, which are there to protect themselves as much as their customers.
It is likely that there are hundreds, if not thousands, of other investors who have been encouraged to move their hard-earned money into unsuitable schemes. This latest ruling places a renewed emphasis on the actions of the wider financial services industry, not just the initial company or adviser. At every stage in the process, the investor’s best interests should be front and centre.
We have helped many investors claim back money after being mis-sold a pension or investment. Even if you have made a complaint to your SIPP provider and it’s been rejected, or FOS has previously rejected your complaint, or your SIPP was opened more than 6 years ago, please get in touch as we may still be able to help.”
Working on a ‘no win – no fee’ basis, TLW’s experienced financial mis-selling lawyers can help you through the compensation process. The team are experienced in all aspects of making complaints to the FOS, making a claim with the FSCS, and where necessary, Court proceedings.
If you are concerned about your, a friend or loved one’s investment with Rowanmoor, CIB or The Resort Group, please get in touch with TLW Solicitors by calling 0800 169 5925, emailing email@example.com or completing our call back form.
Time limits can apply and so anyone wishing to bring a claim should do so without delay.
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