“I don’t agree with Portafina. It is clear that Firm C and Portafina had come to an agreement about their working relationship. Firm C did not have the required regulatory authorisations to give pension transfer advice whereas Portafina did, and an agreement to work together for pension-release clients came about. Portafina has stressed it had never before agreed to work with another authorised firm, as the processes and controls required to set up the relationship would be disproportionate to the level of business it might bring about. However, an exception was made for Firm C, as it had proposed to send significant levels of business to Portafina (two to three cases a month for a year). In those circumstances it seems to me that Portafina needed to do more to ensure that the two firms worked together to give suitable pension transfer advice to clients. Aside from the initial due diligence checks carried out in 2013 at the outset of the relationship, I have not seen any evidence that further checks were made by Portafina to satisfy itself that the pension transfer advice it was giving to clients was aligned with the investment advice they were receiving from firm C. The need to do so was, as I say, a necessary part of the suitability assessment carried out by Portafina on a case by case basis for individual clients. But it was also, in my view, a reasonable due diligence requirement brought about by the ongoing relationship itself, so that any patterns of unsuitable or unaligned advice could be identified and addressed.”
“This doesn’t mean that I’m holding Portafina responsible for the failings of another regulated firm, as it has said in its submissions. I’ve focused on Portafina’s own responsibilities as the business involved with the capacity to ‘unlock’ the funds held in Mr G’s OPS. There’s no dispute that Portafina gave that advice and that it incorrectly thought it could limit its advice to the transfer without seeking information about the investments Firm C intended and eventually arranged for Mr G.”
“These rules essentially mean that a firm can rely on information provided to it by another regulated firm, where it is reasonable to do so. The rule is stated to apply to situations where a firm is required by a handbook rule to obtain the information in question from another person. Portafina says it was therefore entitled to rely on information given to it by Firm C at the outset of their relationship in which Firm C confirmed it would not recommend or otherwise promote UCIS and that it would instead invest in risk-graded cash, equities and bonds. Whilst I note that COBS 2.4.6R(2) is unlikely to apply in these circumstances (as we are not concerned with a situation in which Portafina was required by a handbook rule as such to obtain the information it received from Firm C), I nonetheless agree with Portafina that, in the absence of any evidence to the contrary, it was entitled to take that information from Firm C at face value. It was reasonably entitled to rely on that statement, as far is it went. The difficulty for Portafina is that the statement did not tell it anything meaningful about the intended investment proposition for Mr G. No information at all regarding the proposed investments for Mr G was passed on to Portafina by Firm C. Instead, Portafina chose to rely on a general statement, given two years previously, that said recommendations of broad categories of investments, with potentially broad gradings of risk, might or might not be made in a given case and that UCIS would not be recommended. I don’t think that was a reasonable basis on which Portafina should have assessed the suitability of the pension transfer for Mr G.”
“compare the benefits likely (on reasonable assumptions) to be paid on a defined benefits pension scheme with the benefits afforded by a personal pension scheme… before it advises a retail client to transfer out of a defined benefits pension scheme.”
“The ombudsman is required by DISP rule 3.8.1 to take into account the relevant law, regulations, regulators’ rules and guidance and standards, relevant codes of practice and, where appropriate, what he considers to have been good industry practice at the relevant time. He is free to depart from the relevant law, but if he does so he should say so in his decision and explain why. The other matters referred to in this rule are matters that a court would take into account in determining whether a professional financial adviser had been guilty of negligence or breach of his contract with his client. Again, if the ombudsman is to find an advisor liable to his client notwithstanding his compliance with all those matters, the ombudsman would have to so state in his decision and explain why, in such circumstances, assuming it to be possible, he came to the conclusion that it was fair and reasonable to hold the adviser liable. In these circumstances I consider that the rules applied by the ombudsman are sufficiently predictable. All the matters listed in DISP rule 3.8.1 are formulated or ascertainable with sufficient precision. So far as guiding the conduct of financial advisors are concerned, provided that they comply with “the relevant law, regulations, regulators’ rules and guidance and standards, relevant codes of practice and, where appropriate . . . good industry practice”, they can be assured that they will not be liable to their client in the absence of some exceptional factor requiring a different decision.”
“I think it’s important to point out that I’m not saying Portafina is wholly responsible for the losses simply because Firm S and Firm C are now in liquidation. My starting point as to causation is that Portafina gave unsuitable advice and it is responsible for the losses Mr G suffered in transferring to the SIPP and investing as he did. That isn’t, to my mind, wrong in law or irrational but reflects the facts of the case and my view of the fair and reasonable position. Portafina could’ve prevented the transfer and the investments. Instead it facilitated them, having given unsuitable advice to Mr G that he should transfer. Mr G hasn’t complained about Firm C or Firm S and in light of their liquidation, there would be little point in him doing so. He has complained about Portafina and because of what I have said, it is, in my view, fair and reasonable that Portafina should account to him for the full extent of his losses.”