Was the Advice they Provided Suitable?
The main issue here was that the company explained in their Suitability Reports that they did not advise on the investment, but merely on the pension transfer.
The FCA has clear rules which require companies to consider any investment planned within the SIPP, Family Pension Trust or SSAS in order to provide suitable advice.
Harlequin Property – a Caribbean Property developer – aimed to build luxury resorts in various locations such as St. Vincent and the Grenadines, St. Lucia, the Dominican Republic, Barbados, Thailand and many more. Most of the work never actually commenced despite clients parting with their hard-earned savings and pensions.
The Serious Fraud Office started investigating in 2013 with a number of the businesses from the Harlequin Group entering insolvency proceedings in late 2016.
David Ames the CEO of the companies has been charged with 3 counts of fraud.
In January 2017 the Regulator imposed restrictions on Kingswood, which means it can no longer transfer people’s pensions into SIPPs with Non-Standard Investments.
The FCA notes say that the firm must not “carry out any regulated activities in relation pension switches and/or pension transfers to any self-invested personal pensions (SIPPS) […] except where the member’s funds are to be invested wholly in standard investments.”
Were you Exposed?
If you had not been a High Net-Worth Client (earning over £100,000 per year or with £250k of investable assets) or a Sophisticated Investor at the time of sale, unregulated investments like Harlequin may have not been suitable for you because they left you exposed to the risks of losing your whole pension fund if you invested it in this type of scheme.
The role of a Financial Adviser, however, is not only to review your finances but also your experience in the investment field, in order to assess your understanding of the risks before assessing if a particular investment is suitable for you. We have discovered that in many cases the advice they provided was negligent.