The North East-based wealth management firm is accused of misleading clients of newly-hired financial advisers with ‘non-advised’ direct marketing pension transfer offers. After FOS decisions against the firm and a section 166 skilled person review notice, a compensation scheme has been set up.
True Potential Wealth Management quickly grew its network of financial advisers through generous incentives, paying them 8% of assets under management once a client transferred to True Potential’s telephone-based advice service, platform and funds.
However, the firm has attracted the attention of the Financial Conduct Authority (FCA), with the industry regulator issuing a section 166 notice, requiring True Potential to appoint an independent ‘skilled person’ and review its practices. The 8% offer has since been withdrawn, and a more transparent and fair onboarding process for clients and advisers has been introduced. Recent reports have confirmed that a financial redress scheme has also been set up.
This is not the first time we have seen large amounts of money set aside for compensation: St James’s Place announced a £430 million redress scheme last year after it failed to provide ongoing advice reviews and was found to have an overly complicated and unfair fee structure.
Why was True Potential’s 8% offer a problem?
+ −During the onboarding process, True Potential would send an adviser’s clients a direct marketing offer email on a ‘non-advised’ basis. It was then up to the client to seek independent financial advice and decide if switching to the True Potential fund was the most suitable option. Many reached out to their financial adviser, given their pre-existing relationship, leading to discussions, meetings and help with the application process. Few realised their adviser was being paid a commission if they switched.
After clients had switched their pension funds to True Potential, they no longer had access to their financial adviser. Many suffered financial losses and submitted complaints to the Financial Ombudsman Service (FOS), the independent, government-backed body set up to settle disputes between financial institutions and their customers.
True Potential complaints reach FOS
+ −Complaints to the Financial Ombudsman Service (FOS) highlighted issues such as:
- Clients believing they had received financial advice from their existing adviser about the switch
- Switching recommendations were not in clients’ best interests
- Feeling pressured to switch so the adviser could earn a commission
- True Potential funds were more expensive and/or did not perform as well as their previous pension
The Ombudsman has ruled that clients were not treated fairly or reasonably by their adviser (and thus by True Potential), had been mis-sold a financial product, and should be compensated for their losses.
What is financial mis-selling?
+ −Financial mis-selling happens when a person is given unsuitable advice, for example, to transfer a pension or make an investment. The new pension or investment may have higher fees, exaggerated returns or reduced benefits.
In the case of True Potential, the lure of an 8% commission for advisers appears to have led to many people being persuaded to move their pensions and investments when that wasn’t necessarily in their best interests.
TLW Solicitors’ point of view
+ −Sarah Spruce, Legal Director at TLW Solicitors, says:
“While £100 million appears to be a large amount of money to be set aside for compensation, it remains to be seen if it will be enough. The number of clients affected and the sums they have lost have not been publicly disclosed. St James’s Place increased its redress fund after the initial figure was published, so we will watch the True Potential story with interest.
If you are or were a client of True Potential and believe that you lost money after transferring your pension or investments, please get in touch with my specialist team for a confidential, no-obligation discussion about next steps. There may be valid reasons why it would be better to make a claim to the Financial Ombudsman Service rather than directly to True Potential through their redress scheme. We can discuss your case and determine whether you may be eligible to make a ‘no-win, no-fee’ claim.”
Financial mis-selling specialists – contact TLW Solicitors
+ −If you or a loved one is concerned that you may have lost money through pension or investment mis-selling with True Potential, please get in touch. We will evaluate the sales process and explore possible avenues to recover any losses. If you are eligible to make a claim, we work on a ‘no win, no fee’ basis.
Please call us on 0191 293 1500, email info@tlwsolicitors.co.uk or complete one of the forms below.
It is important to get advice as soon as possible, as strict time limits can apply.
Minimum case values apply.
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