Financial Ombudsman Service rules against Sipp operator

A Sipp operator has been told to compensate an investor after the Financial Ombudsman Service ruled it had failed to ensure that an investment was suitable. The ombudsman has come out in favour of the investor, known only as Mr A, who lost his whole £29,000 pension pot after placing it into a Sipp with Berkeley Burke Sipp Administration. The money was invested in Sustainable Agro Energy, an unregulated scheme. Mr A, aged 51, had been introduced by an unregulated agent of Sustainable Agro Energy originally in 2011. Berkeley said it was not authorised to give financial advice and did not advise Mr A. It said that it had simply acted on his instructions to arrange the investment. It also said it had carried out due diligence through third party analysts. {desktop}{/desktop}{mobile}{/mobile} The ombudsman, in ruling against Berkeley, cited guidance set out in September 2009 on the matter, from the Financial Services Authority. Ombudsman Roy Milne said: "In my view, Sustainable Agro Energy was an unusual and esoteric investment. This was a relatively small value Sipp invested in an unusual and new investment. "Mr A also waived his cancellation rights. These factors should all have alerted Berkeley to the fact that this investment and the Sipp were potentially unsuitable for him. "I consider that Berkeley should have made further enquiries to establish whether the investment was suitable for Mr A. " Berkeley did write to Mr A and explained that the investment was high risk and might prove difficult to sell. "Mr A signed that letter. Mr A explained to us that he was looking for better returns from his existing pension. "He contacted a local adviser for help. "That business suggested the investment in Sustainable Agro Energy using the Berkeley Burke Sipp. "Mr A says that he thought he was receiving advice from that firm.In my view, the evidence that Mr A was relying on what he was told by the introducer is persuasive. "I accept that Mr A is an unsophisticated investor and believed he was receiving financial advice. He does not have a copy of the letter that he signed. He recalls signing something at the home of the introducer. I am not satisfied that the steps taken by Berkeley were sufficient to meet the guidance issued by the FSA. "I am satisfied that if Berkeley had followed the guidance given by the FSA that Mr A would not have started the Sipp." He ruled that to compensate Mr A fairly, the firm should put him as close as possible to the position he would probably now be in if the investment in Sustainable Agro Energy not taken place. To compensate Mr A fairly, he said that the firm should compare the performance of Mr A's actual investment with the return illustrated by the FTSE WMA Stock Market Income Total Return Index over the same period of time. If there was a loss the firm should increase the transfer value of Mr A's Sipp by the amount of this loss. He also ordered the firm to pay £500 for distress and inconvenience and any other outstanding fees. Berkeley has not released a statement on the ruling and has as yet been unavailable for comment.

Financial Ombudsman Service rules against Sipp operator

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