Quilter caught up in Harlequin pension transfer claim

Mrs C, as referred to by the Financial Ombudsman Service (FOS), complained about advice she received from an appointed representative of Intrinsic Financial Planning, now Quilter, in 2010.

Under the firm's advice, Mrs C switched two existing personal pensions worth a combined £50,000 into a self-invested personal pension (SIPP) with Berkeley Burke and paid £42,000 into Harlequin. Berkeley Burke SIPP administration has since fallen into administration fighting claims related to its due diligence obligations on unregulated investments.

Mrs C had attended a seminar on the property scheme, which involved building luxury accommodation in the Caribbean, and was assured by Intrinsic the investment was "risk free".

Harlequin took around £400m of mainly pension investors' money to develop Caribbean villas. Advisers - or ‘agents' - who sold Harlequin earned commissions of up to 15% of the investment. Ultimately, the villas were never built, and the investment is now worth nothing.

When the Harlequin scheme fell under, Mrs C lost her investment and complained to the ombudsman.

Intrinsic, which was bought by Quilter as Old Mutual Wealth in 2014, argued that it had "not authorised the appointed representative to give the disputed advice" so was not responsible.

An ombudsman investigator rejected this and argued Quilter was responsible to compensate the client, stating the Harlequin investment was "a specialist unregulated investment with a limited track record" and "ought to have been considered high risk".

"The investment was not suitable for Mrs C who was investing all of her moderate pension provision and had no investment experience. Mrs C should not have been advised to invest in the Harlequin scheme. If Mrs C had been advised it was unsuitable for her she would not have invested in it," the investigator wrote.

Quilter has been asked to compensate Mrs C by comparing the performance of her SIPP with the way her pensions would have performed if she had not moved them and invested in Harlequin, or if that's not possible comparing the estimated returns with the FTSE UK Private Investors Income Total Return Index. If this comparison shows Mrs C has suffered a loss, the FOS said, compensation should be paid into her pension or to her directly.

Quilter was also asked to take ownership of the Harlequin investment if possible to allow for the SIPP to be closed and if it cannot, compensation should be paid to cover the ongoing SIPP fees for five years. The financial planner was also asked to pay Mrs C £500 for her trouble and upset.

Quilter disputed the investigator's claims and said the advice was not given on its behalf. The firm argued Intrinsic's appointed representative only acted as an introducer and was informed by Berkley Burke the adviser was eligible for an introducer's fee.

Quilter said this fee was non-regulated so the firm did not authorise this business.

The ombudsman did not accept these claims and upheld the complaint.

Quilter declined to comment.

 

 

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• Topics
• Regulation
• SIPP
• Berkley Burke
• Intrinsic
• Quilter
• Ombudsman