An adviser has lost a complaint at the Financial Ombudsman Service (FOS) after a client lost the entirety of his £48,000 pension pot by investing in overseas property venture Harlequin.
The complaint is just one of three the FOS has upheld against Allan McRoberts, trading as AM Wealth Management Services, over advice given to transfer into Sipps which would allow clients to invest in a Harlequin off-plan hotel development in the Caribbean.
All three of the clients were referred to McRoberts through an unregulated introducer acting on behalf of Harlequin. McRoberts maintained in all three complaints that this agent recommended and advised the clients on investing in Harlequin, and that he was just advising on the Sipp that would enable the investment.
Several clients signed identical disclaimers which said they understood this was the case.
The FOS ruled, after appeal from McRoberts, that he did have responsibility for considering the suitability of underlying investments to be held in the Sipp when advising on the suitability of a transfer.
‘This is an independent duty on the firm,’ the FOS ruled. ‘It can’t simply say that the customer had already decided what he wanted to do, so it simply carried out his wishes regardless of whether it was in [the client’s] best interests.’
In all three cases, the FOS has ordered the client to be put back in a position ‘as close as possible to the position he would probably now be in if he’d been given suitable advice.’
Harlequin was first investigated by the Serious Fraud Office in March 2013, and the Financial Services Compensation Scheme (FSCS) has already had to pay at least £63 million in claims over advisers that recommended investments into the failed property schemes.
Harlequin collected an estimated £400 million from UK investors, but built only a fraction of the properties from which returns were meant to be generated.
AM Wealth Management Services is still an authorised firm, according to the FCA’s register, so will also have to pay for trouble and upset caused.
You can read the decision notice here.