A Kent-based financial advisory firm has had its permission cancelled by the Financial Conduct Authority (FCA) after it failed to comply with an instruction from the Financial Ombudsman Service (FOS) to pay redress to a client regarding a Self-Invested Personal Pension (SIPP) investment.

Foreman Financial Services, which also traded as Grainger Co Financial Services, was the subject of a complaint by the client, who argued that the firm had failed to ascertain the suitability of a property investment in which the SIPP monies would be placed. After the firm rejected the complaint, both an adjudicator and an ombudsman at the FOS upheld the complaint, and directed Foreman to pay sufficient compensation to put the client back in the position they would have been in had the SIPP transfer not been made.

However, the firm failed to comply with this instruction. When a firm does not pay an FOS redress instruction, it is inevitable that the FCA will then impose the ultimate sanction of cancelling the firm’s permission.

The client, Mr S (referred to as Mr C in the FCA final notice), was advised to use his SIPP to buy a Harlequin property. Foreman argued to the FOS that it was another firm who introduced Mr S to Harlequin, and said that this firm should bear responsibility for the advice. However, ombudsman Roy Milne noted that this second firm was not authorised to give pension or investment advice, and that Foreman should have considered the suitability of the entire pension investment.

Mr Milne’s judgement said:

“Mr S wanted to invest in Harlequin based on what he had been told by the other adviser. But, that adviser wasn’t authorised to give advice on pensions or investments. Being authorised to give advice comes with responsibilities. I think that the adviser at Foreman should have made sure Mr S understood the risks. And the advice had to be suitable. Mr S was transferring all of his pension to invest in Harlequin. This was clearly a high risk transfer. It was not suitable for Mr S.

“Mr S was referred to Foreman for advice to set up the SIPP. That’s because the other parties involved weren’t regulated to give the advice. This seems to me to be a crucial part of the process. Foreman had to give suitable advice. And I think ought to have made it clear that it was the only firm able to give that advice.”

In a statement on its website, Foreman said:

“It is with great sadness that we would like to inform our past and present clients that Foreman Financial Services Ltd (trading as Grainger Co Financial Services) has permanently ceased trading.

“We would like to thank you for your business and wish you every success in the future.”

Harlequin Property, which is now insolvent, signed contracts with around 6,000 investors to build luxury villas in the Caribbean and in other holiday destinations, but completed only a few hundred of these. Company chairman David Ames is awaiting trial on fraud charges related to the failed property scheme.

The information shown in this article was correct at the time of publication. Articles are not routinely reviewed and as such are not updated. Please be aware the facts, circumstances or legal position may change after publication of the article.