Another advice firm with SIPP complaints falls into FSCS

clock
Another advice firm with SIPP complaints falls into FSCS

The Financial Services Compensation Scheme (FSCS) has declared Devon-based adviser firm Chartergroup Financial Management (CGFM) in default following several SIPP-based complaints.

According to an update on the lifeboat fund's website, the firm failed - or went into ‘special administration' - on 24 January 2019 after determining it could not meet claims. The FSCS told Professional Adviser an administrator has not been appointed to CGFM as there are "no formal insolvency proceedings".

The FSCS also said it had received 14 claims against CGFM. At the time of writing, the Financial Ombudsman Service (FOS) website showed two complaints made against the advice firm last year, both involving advice to transfer into a self-invested personal pension (SIPP).

However, in December PA reported that CGFM was ordered to pay redress to an insistent client who was unsuitably advised to transfer his pension into a SIPP and invest in an unregulated carbon credit scheme. 

Last week, the FSCS increased its overall levy to £635m for 2020/21 with the intermediaries stumping up £213m.

An increase in SIPP operator failures was blamed for the rise by the FSCS, which said: "These are claims where the conduct of the SIPP operators FSCS has declared in default gives rise to a civil liability to the investors because the SIPP operators failed to exercise reasonable care and skill, breached regulatory requirements and/or breached trustee duties."

The body also confirmed a supplementary levy for 2019/20 of £50m from the life distribution, pensions and investment intermediation class. It said this was necessary due to increased claims volumes and new defaults. 

Earlier this month (9 January), Welsh advice firm Economic Financial Solutions, which traded as Torch Wealth Management entered administration after a raft of SIPP complaints. The firm began being wound-up on 7 November 2019 and is being handled by administrator firm Sandling.

Then on 14 January, Sutton Coldfield-based Blackstar Wealth Management was declared in default with a note on the FSCS website stating the firm was "currently no longer trading". Blackstar had received several FOS complains against it, the majority involving SIPP investments into unregulated and high-risk schemes.

 

This article was first published by Professional Adviser, a sister title to International Investment

Subscribe to International Investment's free, twice-daily, newsletter