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Financial advisers implored to check pre-2014 investment advice

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Britain’s financial advisers are being urged to check their pre-2014 pensions advice if they wish to be proactive, uphold the rights of their clients, and avoid FOS complaints.

APJ Solicitors looks at the reasons why due diligence is always required with financial advice, especially regarding pensions…

The Berkeley Burke case

Just last month, embattled Sipp provider Berkeley Burke, finally dropped its lengthy appeal case against the Financial Ombudsman Service. The provider had been appealing a decision that ruled in favour of client Wayne Charlton, who lost £29,000 after being poorly advised to invest his pension pot into a sustainable green oil scheme back in 2011.

Mr. Charlton lost the large sum of money to the unregulated Sustainable AgroEnergy scheme, which reportedly dealt with trees grown for biofuel in Cambodia. Unfortunately, the investment opportunity turned out to be fraudulent and the company went into liquidation in 2012, with more than 250 people left out of pocket. It was discovered that the firm scammed a total of £23m from investors, and three directors were later convicted to a total of 28 years in prison.

Berkeley Burke fought against the FOS decision for many years, arguing that they had carried our appropriate levels of due diligence at the time of the investment.

As an industry, Britain’s financial advisers waited with bated breath for the decision which was supposed to be made in October, but Berkeley Burke had to drop their appeal due to insufficient funds.

This means that the original FOS decision still stands and sets a precedent for the industry. The implications for the profession are that advisers need to ensure that they carried out appropriate levels of due diligence on client investments, even before 2014.

Tough stance for providers

Back in 2013, the Financial Conduct Authority (FCA) published guidance for Sipp operators, and this was followed up with a Dear CEO letter the following year.

These documents set out a tough stance for providers, but what the Berkeley Burke case shone a spotlight on is the fact that appropriate levels of due diligence are not always carried out – and providers are now being urged to check what kind of advice they were handing out to clients before (and after) these guidelines were introduced.

Glyn Taylor, solicitor from APJ, said: “We are urging British financial advisers to check their pre-2014 pensions advice and act proactively if they think it may have fallen below the required standards. Berkeley Burke tried to argue that the FCA had retrospectively applied tighter rules around due diligence, but as this appeal is now dead in the water, advisers need to take the reigns and check the advice they were dishing out before this came to light.

“If any advice is found to be sub-par, the adviser or firm would need to contact the client or clients in question, explain the reasons why the advice fell below the required standards, and take steps to put it right before it escalates into FOS complaints or even legal action.

“Many Brits have lost large sums of money from their hard-earned pension pots because of poor advice from what should be a very trustworthy and highly regarded industry. It’s simply not good enough to dish out advice that isn’t in a client’s best interests. Advisers simply should not be advocating investment decisions without appropriate levels of due diligence on the validity of schemes or pushing certain opportunities so they can get compensation.”

Dodgy sales techniques and unregulated introducers

Glyn continued: “We are always urging Brits to check that they were not mis-sold Sipp products. Mis-selling could mean that financial advisers used dodgy sales techniques such as cold calls or worked with unregulated introducers. It could mean that they pushed certain schemes for a commission, or recommended risky opportunities that were not in the interests of everyday savers who could not afford to lose large sums of money.”

The APJ Solicitors team are experts in mis-sold Sipps and fighting for your rights. If you think you may have been mis-sold a Sipp product, get in touch today to find out how we can help.