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The risks of investing with Blackstar Wealth Management

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In a recent decision involving Blackstar Wealth Management, the Financial Ombudsman Service (FOS) has ruled that a former client had been mis-sold their pension.

Blackstar Wealth Management

Mr I was told of an investment opportunity by an introducer for Blackstar Wealth Management. The firm then advised him to transfer his pension into a Sipp. This was then invested in Store First, a storage pod investment scheme. Mr I’s pension was valued at £40,000.

The Ombudsman felt that the advice given to invest in a storage pod investment was totally unsuitable. This is because Mr I was 59, wanted to retire in six years time, had little in savings and had a mortgage and credit card debts.

In particular, the Ombudsman said that the answers provided by Mr I in his attitude to risk questionnaire (which he completed in the presence of an introducer) should have raised red flags with Blackstar Wealth Management as the answers given were totally at odds with Mr I’s circumstances.

The Ombudsman held that the responses provided by Mr I, that he was prepared to take “extremely high risks” with his investments, should have prompted Blackstar Wealth Management to have more fully analysed their client’s financial situation. The firm should have carried out an assessment of their client’s needs. This would have led them to conclude that this investment was not suitable for him. Therefore, the transfer of £40,000 should not take place.

Decision against Blackstar Wealth Management

The Ombudsman concluded that Blackstar Wealth Management failed to meet regulatory obligations. This included a failure to properly assess their client’s suitability in regards to finances and attitude to risk.

If Blackstar had investigated their client’s financial situation Mr I would not have been advised to invest in Store First. The scheme was high risk, unregulated and totally unsuitable investment for Mr I.

The Ombudsman ruled that Blackstar pay Mr I financial redress to put him into the position in which he would have been, had he not been given this unsuitable advice.

This included putting money into his Sipp that would equate to the current value of what his pension would be as of the Ombudsman’s decision.

He also ordered that Blackstar pay money to Mr I. This payment was equivalent to five years Sipp fees. Finally Blackstar was ordered to pay £300 in compensation for the distress caused.

If you invested with Blackstar Wealth Management or Store First and have lost money you could be due compensation. Call us today for a free consultation.