The Financial Ombudsman Service has told two advice firms to compensate investors after they were mis-sold inappropriate investments.
In one case, Portafina LLP was found to have advised a man referred to as Mr O to transfer his rebate-only personal pension to a SIPP.
The majority of the funds were then invested in unregulated collective investment schemes, also recommended by Portafina.
Despite Mr O’s request for “low to no” risk investments, those recommended to him were high risk.
In response to the complaint, ombudsman Keith Taylor said: “Apart from 15% of the funds which were left in cash, Mr O’s pension was invested into four unregulated collective investment schemes.
“The funds were all speculative and involved investing in very specialised areas. Mr O was advised to invest 85% of his pension funds into these unregulated investments and I don’t think this was appropriate for him.
“Mr O’s attitude to risk was recorded as being ‘moderately cautious’. I don’t think his attitude to risk or his capacity for risk was compatible with his investing such a large proportion of his pension into Ucis. I think that a reasonably competent advisor would have concluded that Ucis funds were unsuitable for Mr O.”
In a separate complaint made to the Financial Ombudsman Service, Greystone Financial Services was criticised for advising Mr P to invest £25,000 of his savings in two unregulated property funds.
Mr P’s advisors failed to warn him of the high risk level associated with the investment in question and also failed to inform him of the possible consequences.
Ombudsman Adrian Hudson believes it was inappropriate for a client with a cautious to balanced attitude to risk to be encouraged to invest such a high percentage of his SIPP funds in Ucis.
He explained: “In my opinion, had he been told of the potential risks of investing part of his SIPP in the Phoenix fund and the Rock Industrial fund he would not have done so.”