In 2010, David and Sheila Solomon were advised by their financial planner Paul Herd to invest £210,477 ($297,206, €238,693) in the New Earth fund via his self-invested personal pension (Sipp).
Herd advised them to make the high-risk investment despite the Solomons saying they were cautious investors with a plan to retire in just four years.
The New Earth fund was then frozen after it hit financial difficulties.
Following the freeze, the Solomons appealed to the Financial Ombudsman Service (FOS) for help. In March 2016, the ombudsman ruled that MFS should pay them almost £500,000, as that is what their pot would have been worth if invested properly, according to UK newspaper The Times.
The ombudsman determined, as David Solomon was aged 60 at the time and would need easy access to his money, that the fund was too high risk and the advice not suitable.
Unsuitable advice
Herd joined MFS Partnership in June 2012 and brought Solomon with him as a client. The advice to invest in New Earth, however, was given when he was employed by his previous advisory firm.
MFS argued that it was the predecessor firm that was responsible for the advice, but the ombudsman said she was “satisfied” that Herd “pre-empted correspondence from that firm and advised [Solomon] to effectively ignore the concerns raised”.
“Given what is known about the nature of the recycling fund, I am satisfied that this was not suitable for a low risk investors such as [Solomon].”
Despite the ruling, MFS did not pay the sum, saying the firm’s insurance did not cover high-risk products like the New Earth Fund. MFS then went into liquidation and the Solomons were forced to go to the Financial Services Compensation Scheme (FSCS) to seek redress.
In November 2017 the FSCS awarded the couple the maximum it is allowed to pay investors, £50,000 each. The MFS liquidator also sent them a cheque for £2,921 in unsecured credit.
Appalled
According to the article by The Times, the Solomons were appalled to find out that Herd is now working for another firm called Elite Wealth Management.
David told the newspaper that he found out Herd will still a financial planner when he googled “Elite” in January.
“My wife and I have endured years of concern and distress due to the negligence of this person. It appears he can just carry on as if nothing had happened,” David said.
Herd is featured on Elite’s company website under it’s “our people” tab and is described as having “extensive knowledge”.
It says he prides himself in in “explaining complicated and technical matters in understandable plain English”.
Alan Powell, director of Elite, told The Times Herd does not operate as a financial planner for the company.
Powell said the FCA had rejected an Elite application to have Herd registered with the authority and an appeal had now been lodged.
