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  • Writer's pictureNew South Law

Intrinsic ordered to pay out 5 separate clients following UCIS advice complaints.

Intrinsic was ordered by the Financial Ombudsman Service (FOS) to compensate five separate clients last month after discovering it had given unsuitable advice when telling them to transfer their pensions into unregulated investment schemes.

In each of the cases, the claimants had transferred their pensions into a self invested personal pension (SIPP) and subsequently invested in unregulated schemes with Sustainable Growth Group (SGG) whilst two of the claimants also invested in Global Forestry.

The SGG group of companies were placed into administration in March 2012 and as a result of a Serious Fraud Office investigation in 2014, three directors were jailed for 28 years collectivley for their roles in the roles they had when mis-selling investments in biofuel.

The SFO is currently conducting an investigation into alleged fraud regarding Global Forestry Investments.

The complaints the five clients from Intrinsic made were complaints about the advice they had received from Intrinstic's appointed representative ER Network Ltd, who also ran unregulated firm Vita Investment Planning on the side, according to the FOS.

In each of the cases, the clients transferred their pensions into a SIPP and shortly after, invested in the unregulated investments. They all complained after SGG went into administration in 2012.

In four of the cases, where Vita was involved, Intrinsic claimed it was not responsible for the advice as it had not been given by its AR but by the unregulated side business.

The FOS disagreed with their argument.

Ombudsman Michael Stubbs said in one of the cases: "The adviser says that he separated the Sipp and SGG advice - ensuring the SGG advice was given by his non regulated business Vita Investment Planning."

"There is also some evidence that supports this. For each of the two SGG investments in a letter, on Vita Investment Planning paper, signed by Mr R has been produced, which confirms that no advice has been given."

"Vita Investment Planning might be a 'recognisably independent business' in respect of the SGG advice. However, there is nothing to connect this business to the pension switch advice."

He went on to conclude that "this advice was given by the ER network."

Ombudsman Stubbs decided that each case should be upheld as the purpose of the advice was to enable investment in the unregulated schemes.

In one of the decisions made by Mr Stubbs, he said: "When giving the advice to switch the personal pensions to the SIPP, the adviser should have considered the investments to be held within the SIPP."

He followed on with "However to do so would require the appointed representative to know what the intended investments to be held within the SIPP were."

"It is clear from the appointed representative's version of events that he was aware that the purpose of the transfer to the SIPP was to enable investment in SGG products and Global Forestry."

In all five cases Intrinsic was ordered to pay each claimant £500 for the distress and inconvenience caused.

In four of the cases, the firm was ordered to pay compensation by comparing the current value of the client's SIPP to the total value of their previous pension as well as pay five years' worth of future fees owed by the client to the SIPP.

In the remaining case, the client was deemed a sophisticated investor and therefore a medium as opposed to a low risk investor.

Here the FOS did not consider that a SIPPP was an unsuitable product for the clients but it did think the investments were unsuitable. He therefore calculated the redress differently in this case.

The FOS decided the client should be put as closely into the position he would have been it he was give suitable advice.

Intrinstic re-branded as Quilter Financial Planning in July 2019 after its parent company completed the acquisition of Lighthouse in June.

Quilter did not want to comment of the FOS decisions as the cases pre-dated the acquisition of Intrinsic in 2014.

The information in this article has been sourced from:

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