The UK's Financial Ombudsman Service (FOS) has told deVere and Partners (UK) that it must to compensate a client who received what it has deemed to be unsuitable advice.
DeVere and Partners (UK) - a separate subsidiary company from the international advice business deVere Group - was told by FOS to have compensate the complainant, dubbed Mr F, who complained about advice relating to a previously-held Qrops plan.
In its ruling, the FOS said that Mr F had originally transferred two existing pensions into a Qrops in 2010 following advice from another business based in Cyprus. When he moved back to the UK in 2014 his £61,000 investment had dropped by £12,000 before he met with deVere & Partners (UK) and its adviser, who recommended selling all of the investments and reinvesting in a structured note and four funds.
The Ombudsman said that in January 2018, deVere & Partners (UK) told Mr F its minimum fee would be increasing to £1,000 a year and at that point Mr F then said he was not prepared to lose any more of his pension through paying fees.
Attitude to risk
In upholding the complaint FOS's investigator thought the recommendation was not suitable for Mr F given his circumstances and attitude to risk. Initially, deVere & Partners UK disagreed with Mr F's assertions, but has agreed to pay compensation according to the benchmark outlined by the ombudsman.
A deVere & Partners (UK) spokesman said: "We are disappointed by the ombudsman's decision in this case but will abide by it."
The ruling states that to compensate Mr F fairly, deVere & Partners (UK) must pay compensation based on a benchmark of 50 per cent from FTSE UK Private Investors Income Total Return Index and 50 per cent average rate from fixed rate bonds and "compare the performance of Mr F's investment with that of the benchmark shown in the ruling document.
"If the fair value is greater than the actual value there is a loss and compensation is payable".
If the actual value is greater than the fair value, no compensation is payable. DeVere UK & Partners should also add interest as set out in the ruling, the FOS said.