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Over £66,000.00 Recovered For Client Due To Negligent Investment Transfer Advice

Over £66,000.00 Recovered For Client Due To Negligent Investment Transfer Advice

In May 2012, our client who had no investment experience, was introduced to the idea of transferring their pension into a SIPP by Avacade Investments, an unregulated firm with no Part 4a permissions from the Financial Conduct Authority (FCA). The financial advisor, recommended that the Claimant should transfer his existing pension into a self-invested private pension (SIPP) to be administered by Liberty SIPP. This was to facilitate an investment in respect of the purchase/sublease of 889 Melina Trees through sales agents Ethical Forestry, as well as an investment in Global Plantations for the purchase/sublease of 40 Teak trees.

The client had three existing pensions, namely with Prudential, BAE Systems and Friends Life. The entirety of the policies was transferred to the same fund within Liberty SIPP, totalling £65,481.80. After paying all of their fees, the remaining balance of £62,228.00 was used for the investments.

The Claimant had a “low risk” investment appetite so far as his pension funds were concerned.  The investment recommended was high risk and resulted in the client paying annual fees which they would not have paid if the pension remained with its ceding providers.

At the time of the advice, the client was an Electrician with an income less £40,000.00 per year. The client also had an outstanding mortgage balance of over £130,000.00, along with £12,000 in additional borrowings at the time of the advice. Therefore, the client could not afford to take such a risk with his pension.

The investment failed and the client was unable to recover any of his pension before he contacted High Street Solicitors. Liberty SIPP then entered administration before a claim could be lodged, meaning that the client had to be referred to the Financial Services Compensation Scheme (FSCS).

The FSCS assessed the claim and found that Liberty SIPP were negligent in accepting such high-risk investments within their portfolio for non-sophisticated investors and failing to conduct their due diligence. An award was made for the sum of £66,111.12 by the FSCS.  Our client is now 56- years old and now has some financial security for the future.