The Financial Ombudsman Service (FOS) has sided with a complainant over unsuitable self-invested personal pension (SIPP) advice from Pi Financial.
In the case dated 3 December 2024, the client (Mr M) complained to the FOS that that his SIPP underperformed over several years, primarily due to advice he received starting in 2009.
Mr M was a client of Alba Asset Management and was recommended to switch from a final salary pension to a Brooklands SIPP. The funds were used to invest in various unregulated investments, including £50,000 in Joyston.
In 2013, Mr M sought a claim against his Joyston investment through the Financial Services Compensation Scheme and upon retiring transferred his employer's group pension into the Brooklands SIPP without specific advice. In January 2014, Mr M transferred his SIPP to RM Strudwick (RMS), which was part of Pi Financial.
RMS provided advice on £100,000 in his SIPP in October 2014 and recommended investing in a Skandia Collective Investment Account (CIA) with a diversified portfolio across various equity, fixed interest, property, and money market funds, aligning with his low-medium risk tolerance and ten-year growth objective.
Pi Financial charged Mr M £2,830.29 in December 2014 and an additional £1,180 in January 2015. In 2017, RMS advised Mr M to invest £50,000 from his SIPP into the Skandia CIA, diversifying across various funds. Mr M's portfolio remained heavily weighted in money market funds, despite updates to his risk tolerance and portfolio analysis.
Mr M disengaged RMS in 2023 and filed a complaint with Pi Financial, noting poor investment growth. Pi initially redirected him to Alba Asset Management for the 2009 advice, but Mr M emphasised the overall poor performance. The FOS upheld Mr M's complaint, finding that RMS's advice led to cash-like investments, which did not align with his risk tolerance or growth objectives. Additionally, an initial advice fee was charged outside the agreed timeline, and it should be refunded with investment returns.
Pi disputed the performance figures and argued it had provided suitable advice, however the FOS determined Pi was responsible for the fee as it had been paid to it. The redress was amended to account for Mr M's disengagement in 2023, and Pi was ordered to conduct a loss calculation based on the performance benchmark.
In its decision on 3 December 2024, the Ombudsman stated that Pi needs to account for the £2,830.29 fee it "took unfairly" in 2014.
It ruled that from the date the fee was taken from the SIPP, Pi Financial needs to work out what this would have been worth from 2014 to the start date shown above if it remained within the SIPP. Then from the start date above until the date of calculation, it should apply growth in line with the FTSE UK private investors income total.
In total, Pi Financial had 17 cases upheld by the FOS in 2024, bringing its all-time total to 124.
Pi director Toni Sheen told PA that of the 17 complaints in 2024, seven were DB-related, and five were upheld against Pi for cases involving failed DFMs and where FOS assigned liability to Pi "despite clear evidence from the client showing we were not the advisory firm at the time".
Sheen said that complaints represent less than 0.16% of Pi Financial's total business. She said she does not anticipate seeing the same levels of complaints going forward, particularly in the DB arena.
"With redress amounts reducing significantly, there is little incentive for claims management companies to pursue claims," she said. "This has left many clients caught in lengthy disputes, often resulting in years of toing and froing without any redress."
Previous paperwork nightmare case
While Pi had nothing further to add specifically on the latest decision, it has previously strongly disputed that it should have been on the hook for at least one prior case. The case in question holds similarities to IFA Tailored Financial Planning's expensive FOS experience that followed a letter of advice slip up, which PA reported on last year. Both TFP and Pi have separately argued that The Pensions Ombudsman (TPO) should have found the DB administrator involved was responsible rather than the advice firms.
In the 27 December 2023 Pi Financial case, a complainant (Ms J) complained about DB transfer delays. She said that because of Pi's actions, the transfer value that she was originally offered was then reduced in value by £118,536.
Ms J sought advice from Pi and signed the paperwork to proceed with the transfer which Pi submitted to the DB administrator, confirmed as Mercer (now Aptia), but found out two weeks later that it had not received a mandatory 'advice confirmation' letter, leading to a recalculation of the transfer value.
Unhappy with the reduced amount, Ms J complained to Mercer, stating that the late notification (via post) of the missing document prevented her from acting before the transfer value expired.
Mercer rejected her complaint, claiming that Pi had failed to submit all the required paperwork. Pi also responded, arguing that it submitted everything on time. It criticised Mercer for using postal communication instead of more immediate means like email or phone. Pi also stated that Ms J could have stopped the recalculation if she had wanted.
Sheen said Pi's letter to the client was dated two days before the CETV deadline but was received by the client ten days later.
"If the letter had arrived in time, the information would have been forwarded on the portal," she said. "If Mercer are instant on advisers using a portal for information, they should use an electronic form of communication."
Unhappy with Pi's response, Ms J escalated the complaint. Pi has maintained that the responsibility for the missed deadline lay with Mercer, despite the FOS ruling.
The FOS found that Pi likely failed to send the necessary 'advice confirmation' letter, leading to the missed deadline. Pi disagreed, arguing that Mercer's postal notification was the real issue and suggested that TPO should handle the case first before further investigation.
"In the majority of cases, the pensions ombudsman bats the complaint back to the consumer for them to exhaust all other avenues before they will consider it," Sheen said in comments shared with PA. "This added to FOS's stick and paste approach with adjudications and decisions is a recipe for disaster and is not providing any support to the adviser."
Mercer sold its UK pension administration arm to Bain Capital-backed Aptia in June 2023.
An Aptia spokesperson has previously told PA: "We cannot comment on individual cases, but Aptia is committed to delivering the best possible service for all."
