The Financial Ombudsman Service (FOS) recently found that many people had suffered significant financial losses as a result of transferring their pensions into Sipps provided by Brooklands Trustees Limited.
Brooklands Trustees Limited
The FOS stated that such losses could have been avoided had the Sipp provider exercised due diligence. It was their responsibility to ensure that the investments were appropriate and suitable with regards to their client’s needs and risk profile.
So far Brooklands Trustees Limited have been held liable by FOS for losses totalling £1.6 million. Their client’s pension savings were ploughed into various overseas risky investments. Schemes included an Australian property fund which collapsed in 2013.
Brooklands and FCP
Many of the problems stem back to an arrangement that Brooklands Trustees Limited had in place with a Cyprus based introducer called FCP. The introducer had been approaching UK customers since 2009 and advising them to transfer their pensions. However, FCP were not authorised to carry out such pension work in the UK.
Brooklands customers
One Brooklands customer, Stuart Rowe, lost his life’s savings after trusting in the Sipp provider. The retired retail manager was advised to move his safe final salary pension into to the high risk Australian property fund which later failed.
This resulted in him losing his £260,000 pension fund. The Financial Ombudsman Service (FOS) ruled that had Brooklands conducted due diligence then the Sipp transfer would never have happened.
The FOS also stated that Brooklands Trustees Limited should pay the maximum award of £150,000. This was supposed to to return their client “to the position he would have been but for the unsuitable advice”. However, the maximum award still leaves Mr Rowe out of pocket by £110,000.
FOS decision
The FOS was scathing about the lack of due diligence exercised by Brooklands Trustees Limited. It was stated that had the company had suitable controls in place they would have noticed that many of the investments were not suitable and accordingly advised clients not to proceed.
In particular, Brooklands Trustees Limited failed in their duty to treat customers fairly. This FOS highlighted that they should have put in place risk management systems. These would have flagged potential instances of unsuitable or poor advice.
The FOS also noted that given the high volume of business coming from one firm that was both not located in the UK and not authorised to carry out pension business in the UK should have rung alarm bells.
As Brooklands Trustees Limited had failed to identify that FCP was unauthorised to carry out pension business in the UK they should be liable for the losses. Although Brooklands Trustees Limited has since gone into administration it recently accepted a buyout deal from Heritage Pensions.
If you invested in a pension provided by Brooklands Trustees Limited, you may have fallen victim to mis-selling. Get in touch and we can discuss your options.