Following months of speculation, the Financial Ombudsman Service (FOS) has issued landmark decisions against Liberty Sipp, the self-invested personal pension (SIPP) provider that has recently come under fire.
The ombudsman has given the same response in three preliminary decisions for clients of financial mis-selling solicitors Anthony Philip James & Co (APJ), with the three individuals investing a total of £36,200 into the Ethical Forestry scheme through Liberty Sipp.
The investments were made following the advice of introducer Avacade, which cold called the clients and recommended they transfer their pensions. The introducer made similar recommendations to thousands of other investors across the UK, resulting in millions of pounds of losses.
The FOS adjudicator has found that Liberty Sipp was in breach of its duty of care to clients because it should have been aware that “there was a high chance that a lot, if not all, of the business introduced by Avacade, would contain a high risk of significant consumer detriment”.
The adjudicator concluded that it was not “fair or reasonable for Liberty Sipp to have accepted the clients applications on the basis and manner proposed”.
Commenting, Anthony Philip James & Co financial mis-selling solicitor Glyn Taylor said: “We’re delighted that the FOS has recognised what we’ve been arguing for months, that Liberty Sipp had a responsibility to carry out due diligence on the business it accepted from Avacade and in failing to do this, and agreeing to accept such a large amount of questionable business from Avacade, it is liable for clients losses.”
The solicitors argued that the decisions could be a “watershed for the SIPP industry”, as they directly refute Liberty Sipp’s argument that they are not liable for victims’ losses as they accepted business on an execution only basis.
Furthermore, APJ have a further 500 similar cases lodged with the FOS against Liberty Sipp for clients, with a value totalling over £18m.
Due to the large volume of similar cases, Liberty Sipp could be facing a bill worth tens of millions to compensate the clients it has failed.
“We’re confident that the FOS will now issue similar decisions on behalf of many more of our other clients who have lost money after putting their trust in Avacade and Liberty Sipp,” Taylor added.
“Our concern now is that the hundred of victims we know of are only the tip of the iceberg. We’ve had more than 150 calls from people who have lost money after investing with Liberty Sipp in the last month alone. It’s terrible to hear how these people are struggling having been scammed and we urge anyone who has been affected to seek help so they can get the compensation they deserve.”
The adjudicator has deemed that Liberty Sipp should compensate the clients so that they are back in the position they would have been, had they not transferred their pensions, including any gains they would have made in their previous pensions, while also paying a nominal fee of £500 for the upset caused.
However, Liberty Sipp has the opportunity to appeal the preliminary decisions.
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