IFA to pay up to £150k to compensate client for Harlequin advice
The Financial Ombudsman Service (FOS) has an IFA to pay up to £150,000 in compensation for the advice it gave a client to open a SIPP, which was used to invest in failed property scheme Harlequin.
In early 2010, a client - designated 'Mrs P' by the ombudsman - was introduced to Sussex IFA by a third-party adviser. At the time, he needed a regulated business to facilitate the transfer of his existing personal pensions to a self-invested personal pension (SIPP).
In May 2011 Mrs P met with the adviser, an authorised representative of Professional Intermediary Introducers, to discuss her pension requirements.
Mrs P had a personal pension with a value of around £110,000 that was transferred to a Sipp in September 2011.
In October 2011 £96,000 was invested in Harlequin Property which subsequently failed.
A FOS adjudicator looked into the complaint and he recommended it should be upheld as Harlequin was an unregulated investment and came with significant risks such as illiquidity.
Overall, Harlequin took about £400m of mainly pension investors' money to develop villas in the Caribbean. Advisers - or ‘agents' - who sold Harlequin earned commissions of up to 15% of the investment. The scheme ran into trouble in the years after Mr F's investment, the villas were never built, and the investment is now worth zero.
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