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Over £16,000.00 Recovered For Client Due To Negligent Transfer Advice

Over £16,000.00 Recovered For Client Due To Negligent Transfer Advice

In September 2011, Avacade Investments, an unregulated firm with no Part 4a permissions from the Financial Conduct Authority (FCA), recommended that our client transfer their pension into a self-invested private pension (SIPP) administered by Liberty SIPP. This was to facilitate an investment in timber through the sales agent Ethical Forestry. As a consequence of the promotion, our client arranged to transfer his only pension with Wesleyan Assurance into the SIPP; a total of £17,042.90 was transferred.

After paying inflated annual fees, £12,000.00 was then used purchase/sublease 400 Melina Trees in Costa Rica. Despite our client’s low risk investment appetite, the recommended investments were high risk in nature. This underlying investment was an unregulated collective investment scheme or at least a non-mainstream pooled investment. It was wholly unsuitable as a pension investment and resulted in a lack of diversification of our client’s pension fund. An investment of this nature ought not to have been offered or promoted to an unsophisticated investor such as our client.

At the time of the advice, the client was earning less than £40,000 per year and was close to pensionable age. The client still had over £190,000.00 left to pay on his mortgage and could therefore could not afford to take any risks with his pension.

The investment failed to generate the projected income for the SIPP 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 £16,068.48 by the FSCS.