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APJ receives FOS backing on second Guinness Mahon Sipp case

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The Financial Ombudsman Service (FOS) has issued a second decision regarding a self-invested personal pension (Sipp) mis-selling complaint against Guinness Mahon.

The complaint relates to a high-risk investment within a Sipp, following unregulated advice from the adviser.

It is the second similar case that we have received a positive ruling on from the FOS in as many weeks.

Guinness Mahon case

The case is concerned with how Guinness Mahon opened a SIPP with the client. It followed advice received from an unregulated firm. Avacade were not authorised by the FOS to provide pension advice. However, they persuaded the client to make a high-risk investment in high-risk schemes including Ethical Forestry

We argued that Guinness Mahon should have had considerable doubts about the motivation and competency of Avacade.

The FOS agreed. They stated that Avacade’s business model should have made it clear to Guinness Mahon that opening a SIPP would result in consumer detriment. Hence, the FOS has decided that it was bad practice. It is against the provider’s duty to accept business from Avacade.

The FOS has ruled that compensation must be paid by Guinness Mahon. However, they are unable to value the investment. The FOS are treating the investment as though it has lost all value.

Guinness Mahon is now liable to pay the total amount of compensation equal to the investment. This will be paid into the clients Sipp as a cash sum. They also must pay him an additional £500 for the upset caused.

Our thoughts

Glyn Taylor, one of our leading financial mis-selling specialists, said: “This is the second decision we have received from the FOS against Guinness Mahon. What is most notable here is that the FOS have made the link to Avacade. They have acknowledged that Sipp providers have a duty to consider whether accepting referrals from unregulated introducers would be detrimental to clients.

“To our knowledge, this is the first time the FOS has actively made the link that Sipp providers should be responsible for due diligence when accepting high volumes of referrals on an execution only basis from unregulated introducers.”

This FOS ruling comes after a similar ruling we secured for a client in June. The client had also invested in a Sipp with Guinness Mahon on the advice of Avacade. The FOS ruled on the same grounds, calling on the provider to offer fair compensation.    

“We welcome these decisions by the FOS. It sets a precedent for other clients who were encouraged by unregulated introducers to invest in Sipps with Guinness Mahon, as well as other providers such as Liberty Sipp.”

 APJ has issued five legal cases against Guinness Mahon and is preparing to issue around twenty more.