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Portafina pays the price for poor transfer advice

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Financial advisors, Portafina*, has become the latest firm to land in rough waters. The Financial Ombudsman Service (FOS) has received 128 complaints. 84 of these have been upheld and 41 are still pending investigation.

Portafina advice

There have been failings on behalf on clients. Most recently the FOS upheld a complaint made by a client known only as Mrs G. The client had been advised to transfer into a self-invested personal pension (Sipp) from her occupational pension scheme. The adviser placed her savings into renewable energy and overseas properties.

The advice given to her in 2011 has now rendered Mrs G unable to withdraw benefits from her pension. This is due to her funds being illiquid. As a result, she cannot easily sell or exchange them without incurring substantial losses.

Before she moved her money, Mrs G’s pension was valued at a little over £253,000. Mrs G had hoped that she would be able to pay off debts and make home improvements ahead of her planned retirement.

Portafina ruling

Portafina has been ordered by the Ombudsman to pay at least £150,000 in compensation to Mrs G. This is the maximum amount of compensation that the FOS can order. It will return her to the financial position she would have been at if she had not followed the advice.

Ombudsman for the FOS, David Ashley, stated:

“Recommending that Mrs G opt out and then transfer out of her occupational pension scheme was clearly unsuitable advice.

“The adviser should have told Mrs G to remain a member of the scheme. This was Mrs G’s only pension provision. It was also a significant amount of service that she had built up.

“Mrs G would likely have relied on it to provide an income through her retirement. Mrs G hadn’t got the capacity to accept the significant risks that the transaction presented. Effectively opting out of her occupational pension scheme and transferring the accrued benefits and then investing in funds that presented appreciable risks.

Glyn Taylor, solicitor at APJ said: “If Mrs G has been advised correctly, it’s likely she would have stayed in her previous pension. Moving to a Sipp is always risky, and on the whole not suitable for novice investors.

“Many people have received similar poor advice from financial advisers and introducers who cold called them offering a free pension review. They may also be due compensation for their losses.”

Have you moved your pension after advice from Portafina or another firm? Contact our legal experts today for a free consultation on whether you can secure compensation.

*Portafina is the trading name of Portafina Investment Management Ltd