Advice firm, Consumer Wealth based in Gateshead is yet another advisory firm who has entered into voluntary liquidation, doing so in January this year.
RSM are the administrators appointed to the firm, who went into liquidation with 13 Financial Ombudsman Complaints lodged against them dating back to April 2018.
Consumer Wealth, it was also established, had ties with collapsed discretionary fund manager Greyfriars Asset Management, who also went into administration in the latter part of 2018 after struggling with numerous complaints and difficulties for two years prior, struggling with ill-judged investment decisions and mounting FOS complaints and restrictions placed on them.
Unfortunately, following in the footsteps of Greyfriars, complaints continued regarding Consumer Wealth, with one, in particular, being published on the FOS website!
The complaint released online surrounded the information and advice that a particular client of Consumer Wealth was given, which ultimately was to switch his pension to a Sipp.
In the summer of 2015, this particular client was advised by Consumer Wealth to move their two personal pension plans to a Sipp. Personal pension plans which at the time were valued at £58,000.
What Consumer Wealth advised was that in the current climate 49% of the Sipp should be invested into an equity fund, 49% into the high-risk Greyfriars Portfolio 6 fund and 2% should be held in cash.
Not for long
Subsequently, the client soon raised a complaint and the independent adjudicator assessing the case and taking all information and detail into account, concluded that the claim at this stage would be upheld. Upheld based on the statement that there was no need to switch the client’s accounts as the recommended investments were much higher than the client’s risk appetite.
Of course, Consumer Wealth disagreed with the upheld complaint stating that they believed the clients level of risk to be more than suitable for what was recommended.
Moving from the adjudicator to the FOS, the FOS investigated the complaint further, and success was to be found on the side of the client, as the Ombudsman sided with the adjudicator, as they too could see no compelling evidence of what the client benefitted by consolidating both pensions into a Sipp.
Consumer Wealth was at the time also informed that they should pay £250 as compensation for the unnecessary pension switch and ensure any compensation is repaid for any losses incurred based on their calculation method.
All outlined in the ruling and published for all to see, an example of how firms can get it wrong and in cases like Consumer Wealth, face the ultimate penalty.
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