In 2011 Paul Davies, trading as Phoenix Financial (Phoenix), and The Pensions Office Limited (TPO) advised our client to transfer her traditional civil service pension into a self-invested personal pension or SIPP with The Lifetime SIPP Company (Lifetime). An investment of £61,500 in Harlequin Hotels & Resorts followed.
The investment was an unregulated collective investment scheme which meant that it was a considerably riskier investment than our client would have been comfortable making. In fact, in February 2017 the Serious Fraud Office charged the Chairman of the Harlequin group of companies with three counts of fraud. The seemingly fraudulent investment is now, for all practical purposes, entirely worthless, representing a significant loss of our client’s pension which was ultimately supposed to ensure a secure retirement for her.
Why were two financial advisors involved?
In our experience, TPO were typically enlisted as financial advisors where the pension transfer involved an occupational pension scheme. Given that our client had an occupational pension with the Civil Service and Phoenix did not have the relevant permissions to prepare the necessary pension transfer analysis, Phoenix instructed TPO.
Both firms advised our client to transfer her pension and failed to advise on the underlying investment in Harlequin, contrary to guidance issued by the Regulator. As a result, our client had a valid claim against both firms.
Having fully investigated the circumstances surrounding our client’s pension transfer, expert lawyers first prepared and lodged a claim against TPO in 2016. Our client was awarded £50,000 by the Financial Services Compensation Scheme (FSCS) the following year. Our lawyers then lodged a further FSCS claim, this time against Phoenix, resulting in a further award of £50,000 for our client.
Despite the fact that both of these claims awarded our client the statutory maximum award of £50,000, our lawyers sought to bring a third and final claim against our client’s SIPP operator and administrator, Lifetime, in an attempt to compensate our client as fully as possible for her losses. Lifetime entered into administration in March 2018 and has since entered liquidation, and so, this third claim was also directed to the FSCS.
This claim was brought on the basis that Lifetime carried out insufficient due diligence in respect of the high risk Harlequin investment and sought to highlight that had Lifetime carried out adequate due diligence, they would not have allowed the investment to be held in the client’s SIPP in the first place.
The FSCS concluded its thematic review into the background of Lifetime in June 2019, meaning claims against Lifetime benefit from the new £85,000 limit. As a result, our client has received a further £69,334.43 from the FSCS. Meaning, in total, our lawyers have recovered £169,334.43 for our client, compensating her not only for the loss of the Harlequin investment but also for the growth her pension would have seen, if not for the transfer.