The Financial Ombudsman Service (FOS) handed down two separate decisions relating to similar cases involving pension provider Liberty Sipp.
The FOS found that the firm breached its duty of care in both cases.
The cases revolved around the Sipp provider accepting investments from Ethical Forestry, which ran an unregulated investment scheme into Costa Rica plantations and collapsed in December 2015.
The two complaints were submitted by financial mis-selling litigation firm APJ Solicitors, on behalf of two clients, who had invested a total of £37,500 ($44,359, €40,949).
The individuals were advised to move their pensions into Ethical Forestry’s scheme by introducer firm Avacade, which approached them through cold calls.
“The FOS found that Liberty breached its duty of care to these clients because it did not act in their client’s best interests in preventing significant consumer detriment through accepting Ethical Forestry into the Sipp,” the law firm said.
“They also failed to identify that there was a significant risk that Avacade was giving advice and conducting regulated activities without being authorised to do so.”
Lack of due diligence
In its decisions, the FOS claimed that if Liberty had treated its customers fairly, it’s unlikely that the two clients would have invested their pensions and suffered subsequent losses.
Glyn Taylor, solicitor at APJ Solicitors, said: “The FOS has recognised and supported our argument that Liberty had a responsibility to carry out greater due diligence on the business it accepted from Avacade, and in failing to do this, and agreeing to accept such a large amount of questionable business from Avacade, it is liable for their clients losses.”
If the Sipp provider is unable to repay its customers, it will be declared in default and any claims will be then passed on to the Financial Services Compensation Scheme (FSCS).
APJ has around 800 similar cases in the pipeline against Liberty lodged with the Ombudsman, totalling to more than £31m in losses, the law firm said.
Taylor added: “We’re confident that the FOS will now issue similar decisions on behalf of many more of our clients who have lost money after putting their trust in Avacade and Liberty.”
Plethora of compensations
APJ said: “Liberty now has to calculate the losses they owe each of its clients and compensate them to put them back in the position that they would have been in had they not transferred their pensions, including any gains they would have made in their previous pensions, and also pay a nominal sum of £500 each for the trouble and upset caused.”
Liberty was found guilty in another FOS decision in December 2018, which involved Ethical Forestry and Avacade as well.
The Financial Conduct Authority (FCA) took legal action against the introducer at the end of 2018, while three directors of the plantation investment firm were banned in May last year.
