• The Claims Bureau

Facts & Figures Financial Planners to pay compensation after advisers' poor advice around Harlequin.

Updated: May 30, 2019

Facts & Figures Financial Planners advice firm have been accused of not understanding Harlequin following advice to a client. The client was poorly advised to put his pension into a Self Invested Personal Pension so that he could invest in Harlequin.

After investigation by the Financial Ombudsman Service, they discovered that the adviser should have properly protected the client from the investment as he was unable to afford it.

The client, called Mr B by the FOS, initially contacted the advice firm Facts & Figures in June of 2011 to transfer all four of his pensions into a SIPP in order to invest it into Harlequin's overseas property developments.

Originally, Mr B was told about Harlequin by an unregulated introducer. Mr B's four pension plans came to a transfer value of £35,000 which was made of two personal pensions, valued at £19,000 and two deferred pensions from previous employers with a value of £16,000.

Facts & Figures advised Mr B not to transfer to the SIPP, nor should he invest in Harlequin, a scheme with a £33,000 deposit and which has since collapsed.

The adviser ensured the client signed an insistent client form, which stated the investment was of high risk. Mr B signed the form and June 29th 2011 and put the £33,000 deposit into it.

It has now been found that Facts & Figures had not understood the investment as if they did, they would have realised that Mr B could not complete the purchase as the initial payment would have been followed by further stage payments totalling up the investment price at £110,000.

As discussed previously, Mr B's SIPP value was just over £35,000 and Mr B had not other funds to pay the rest of the investment off.

The adviser that dealt with Mr B, argued that that regulations did not state that advice needs to be given around the underlying investment and therefore did not see the full details of the investment.

In January 2013, however, the Financial Conduct Authority altered firms that the rules regarding investment advice were in force at the time of the sale of the SIPP to Mr B.

The Financial Ombudsman Service ruled that Facts & Figures needed to take into account and advise on how suitable the investment was as well as the transfer of the SIPP. The FOS also said that Mr B should not have been treated as an insistent client and that he was relying on the business for appropriate advice. It was also said that Facts & Figures should not have gone ahead with the transaction for a client who is an inexperienced investor who was told by an unregulated introducer that the investment was great despite the fact he could not afford it. They should have refused the business.

Final rulings by the FOS stated that the advice to transfer into the SIPP was unsuitable, they do not believe Mr B would have gone ahead, had he known the risks, additional payment information and all the other facts had been given to him clearly.

Facts & Figures are now required to compensate Mr B in order to get him as close to the position he would be in if his pensions had not been transferred. The firm must also pay any future fees owed by Mr B to the SIPP for the next five years and pay him £200 for the distress and inconvenience caused.

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Information in this article has been sourced from: https://www.ftadviser.com/pensions/2019/05/28/adviser-accused-of-not-understanding-harlequin/?page=2

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