The Financial Ombudsman Service has upheld 22 complaints against Glamorgan-based Kingswood Financial Advisors regarding the failed unregulated investment scheme Harlequin.
Harlequin took £400m of mostly pension investor’s money to develop Caribbean villas. Advisers who sold Harlequin earned commissions of up to 15% of the investment. However, the villas were never built, and the investment is now worth zero.
The Wales-based advice firm started receiving complaints through the Financial Ombudsman Service in 2015, when it received two in relation to its involvement in purchasing Harlequin properties through self-invested personal pensions (SIPPs). That number is now at 22 individual complaints and it may not stop there.
Kingswood has come under fire from the Ombudsman for the role it played in opening up a SIPP which the customer then used to invest in Harlequin.
The firm argues that the clients it dealt with were introduced to Harlequin by someone else, and had already made the decision to invest with an adviser not associated with the firm.
All Kingswood did, it insisted, was set up the SIPP and receive fees for its advice on the SIPP, not the Harlequin investment.
However, the Ombudsman ruled that Kingswood could not simply carry out a customer’s wishes regardless of whether or not it was in their best interests.
It is still unknown how much this ruling will cost Kingswood, as the compensation are unique for each case.