Intelligent Money
Discussion
Ken_Code said:
It’s pejorative. If you want to try to be a smart-arse over which words to use maybe check how to spell them first.
They chose not to carry out sufficient due-diligence. A better-managed firm would not have done this.
You've clearly got an axe to grind. Why not come clean about your interest?They chose not to carry out sufficient due-diligence. A better-managed firm would not have done this.
b
hstewie said:
hstewie said:Rufus Stone said:
Does the determination state what the Ombudsman considers you should have done differently to avoid being held liable?
Start with around page 45 of the PDF.The Obudsman said:
The annex to the “Dear CEO” letter states, amongst other things, that the Thematic Review identified significant failings in due diligence procedures to assess non-standard investments and that:
“Principle 2 of the FCA’s Principles for Business requires all firms to conduct their business with due skill, care, and diligence. SIPP operators should ensure that they conduct and retain appropriate and sufficient due diligence, for example, assessing that assets allowed into a scheme are appropriate for a pension scheme. Our thematic review found that most SIPP operators failed to undertake adequate due diligence on high risk, speculative and non-standard investments...”
The annex also sets out how a SIPP operator might meet its obligations in relation to investment due diligence. Such obligations could be met by:
“Principle 2 of the FCA’s Principles for Business requires all firms to conduct their business with due skill, care, and diligence. SIPP operators should ensure that they conduct and retain appropriate and sufficient due diligence, for example, assessing that assets allowed into a scheme are appropriate for a pension scheme. Our thematic review found that most SIPP operators failed to undertake adequate due diligence on high risk, speculative and non-standard investments...”
The annex also sets out how a SIPP operator might meet its obligations in relation to investment due diligence. Such obligations could be met by:
- correctly establishing and understanding the nature of an investment
- ensuring that an investment is genuine and not a scam, or linked to fraudulent
- ensuring that an investment is safe/secure (meaning that custody of assets is through a reputable arrangement, and any contractual agreements are correctly drawn-up and legally enforceable)
- ensuring that an investment can be independently valued, both at point of purchase and subsequently, and
- ensuring that an investment is not impaired (for example that previous investors have received income if expected, or that any investment providers are credit worthyetc.)
stuthe said:
said:Ken_Code said:
You seem to still be trying to suggest that your firm hasn’t done anything wrong here, and unwilling to learn from it.
I really have no idea how you reach this conclusion from Julian’s post?FFS, man. Give the guys a break. They’ve acknowledged they made a mistake, and they’re going to be massively out of pocket to put it right. 20-20 hindsight shows a bit of naivety in relying on FCA accreditation alone of people they worked with. They’ll clearly add extra process to not be in the same position going forwards.
Personally I find it really harsh and don't understand how the people further down the chain aren't being held accountable for any potential wrong doing.
And no, I'm not or ever have been an IFA, I joined to post in the retirement thread as I've been a long term lurker.
Rufus Stone said:
That sounds like generic FCA literature, is it?
Like I said I don't work in the industry so I don't know but it's referenced in the Ombudsman's document and would seem to explain their reasoning in terms that I can understandable as a layman.It's literally all there if you bloody read it
Rufus Stone said:
That sounds like generic FCA literature, is it?
A few people might be being confused. IM isn't being punished by the FCA. The recent decision against them was through the Financial Ombudsman Service (a dispute resolution service meant as a cheaper and faster alternative to court). There are 80 further, similar cases in the pipeline. I don't know but suspect many are related to the financial advice firm Active Wealth (read up on them) and the dodgy investments they recommended and implemented in SIPPS through IM (not that IM had a role in recommending those investments).
The financial risk in 80 claims is large if they relate to total losses in large investments. The FOS can award up to £190k for disputes relating to actions pre-2019 and more than £400k for ones taking place after that and complained of to the FOS >April 2023.
I doubt all the claims surpass the relevant maximum, but in theory you have 80 x £190,000 (£15m) in liability plus the costs of defending and running the claims. That's a large liability for a firm with around 10% of that in equity (according to last accounts filed, may be more or less now).
Suspect that's why the FCA have intervened and demanded the asset freeze, to ensure the firm doesn't phoenix or otherwise disperse assets that could be used to refund clients in the event the company fails (I am not suggesting that it will or is likely to).
Ken_Code said:
Mr Pointy said:
He said "considered", you've used the more perjorative term "assumed". Why?
Odd to see a few low post count posters popping up to have a go. I guess the lurking IFAs are over moon.
It’s pejorative. If you want to try to be a smart-arse over which words to use maybe check how to spell them first.Odd to see a few low post count posters popping up to have a go. I guess the lurking IFAs are over moon.
They chose not to carry out sufficient due-diligence. A better-managed firm would not have done this.
bhstewie said:
hstewie said: Like I said I don't work in the industry so I don't know but it's referenced in the Ombudsman's document and would seem to explain their reasoning in terms that I can understandable as a layman.
It's literally all there if you bloody read it
And I have been, well some more of it. It's literally all there if you bloody read it
In sort, it appears that the Ombudsman is of the opinion that had IM undertaken more in depth due diligence of the introducing IFA and the Greyfriars P6 fund, they would have concluded that they should not proceed with it as a SIPP operator.
Forester1965 said:
A few people might be being confused.
IM isn't being punished by the FCA. The recent decision against them was through the Financial Ombudsman Service (a dispute resolution service meant as a cheaper and faster alternative to court). There are 80 further, similar cases in the pipeline. I don't know but suspect many are related to the financial advice firm Active Wealth (read up on them) and the dodgy investments they recommended and implemented in SIPPS through IM (not that IM had a role in recommending those investments).
The financial risk in 80 claims is large if they relate to total losses in large investments. The FOS can award up to £190k for disputes relating to actions pre-2019 and more than £400k for ones taking place after that and complained of to the FOS >April 2023.
I doubt all the claims surpass the relevant maximum, but in theory you have 80 x £190,000 (£15m) in liability plus the costs of defending and running the claims. That's a large liability for a firm with around 10% of that in equity (according to last accounts filed, may be more or less now).
Suspect that's why the FCA have intervened and demanded the asset freeze, to ensure the firm doesn't phoenix or otherwise disperse assets that could be used to refund clients in the event the company fails (I am not suggesting that it will or is likely to).
I am super curious. I know how one looks up decided cases , but how would joe public know about complaints not yet decided ( other than being an insider in the FOS or related body with access ) ? IM isn't being punished by the FCA. The recent decision against them was through the Financial Ombudsman Service (a dispute resolution service meant as a cheaper and faster alternative to court). There are 80 further, similar cases in the pipeline. I don't know but suspect many are related to the financial advice firm Active Wealth (read up on them) and the dodgy investments they recommended and implemented in SIPPS through IM (not that IM had a role in recommending those investments).
The financial risk in 80 claims is large if they relate to total losses in large investments. The FOS can award up to £190k for disputes relating to actions pre-2019 and more than £400k for ones taking place after that and complained of to the FOS >April 2023.
I doubt all the claims surpass the relevant maximum, but in theory you have 80 x £190,000 (£15m) in liability plus the costs of defending and running the claims. That's a large liability for a firm with around 10% of that in equity (according to last accounts filed, may be more or less now).
Suspect that's why the FCA have intervened and demanded the asset freeze, to ensure the firm doesn't phoenix or otherwise disperse assets that could be used to refund clients in the event the company fails (I am not suggesting that it will or is likely to).
...or " whistle blowing " inside organisation being complained against ?
Just curiosity .
Edited by PM3 on Sunday 26th May 11:42
Rufus Stone said:
And I have been, well some more of it.
In sort, it appears that the Ombudsman is of the opinion that had IM undertaken more in depth due diligence of the introducing IFA and the Greyfriars P6 fund, they would have concluded that they should not proceed with it as a SIPP operator.
That's pretty much how I read it in so much as you can't just disclaim and waiver your way out of any responsibility for how your customers behave.In sort, it appears that the Ombudsman is of the opinion that had IM undertaken more in depth due diligence of the introducing IFA and the Greyfriars P6 fund, they would have concluded that they should not proceed with it as a SIPP operator.
PM3 the 80 figure is in the Citywire article linked on the first page.
No idea how they know that number obviously.
bhstewie said:
hstewie said: That's pretty much how I read it in so much as you can't just disclaim and waiver your way out of any responsibility for how your customers behave.
You should perhaps note that IM did undertake due diligence checks, but the Ombusdman's opinion was they should have been more in depth and would have led to a specific conclusion on IM's part.Rufus Stone said:
You should perhaps note that IM did undertake due diligence checks, but the Ombusdman's opinion was they should have been more in depth and would have led to a specific conclusion on IM's part.
It's a very thorough document and quite an interesting read (I'm sad like that) 
I based my comment on this
The Ombudsman said:
So, I’m satisfied that Mr S’ IM SIPP shouldn’t have been established and his IM monies shouldn’t have been invested in the P6 holdings. And that the opportunity for IM to execute investment instructions to invest Mr S’ monies with Greyfriars and in P6, or proceed in reliance on an indemnity and/or risk disclaimers, shouldn’t have arisen at all. I’m firmly of the view that it wasn’t fair and reasonable in all the circumstances for IM to accept Mr S’ business from Active Wealth or for it to accept his application to invest with Greyfriars and in P6.
Again though I don't work in the industry so I might have misunderstood the ruling.I'm also sure out of that entirely document it's easy to cherry pick sections that support different positions and I can see entirely the "more in depth" aspect around what due diligence was done.
bhstewie said:
hstewie said:Rufus Stone said:
Does the determination state what the Ombudsman considers you should have done differently to avoid being held liable?
Start with around page 45 of the PDF.The Obudsman said:
The annex to the “Dear CEO” letter states, amongst other things, that the Thematic Review identified significant failings in due diligence procedures to assess non-standard investments and that:
“Principle 2 of the FCA’s Principles for Business requires all firms to conduct their business with due skill, care, and diligence. SIPP operators should ensure that they conduct and retain appropriate and sufficient due diligence, for example, assessing that assets allowed into a scheme are appropriate for a pension scheme. Our thematic review found that most SIPP operators failed to undertake adequate due diligence on high risk, speculative and non-standard investments...”
The annex also sets out how a SIPP operator might meet its obligations in relation to investment due diligence. Such obligations could be met by:
“Principle 2 of the FCA’s Principles for Business requires all firms to conduct their business with due skill, care, and diligence. SIPP operators should ensure that they conduct and retain appropriate and sufficient due diligence, for example, assessing that assets allowed into a scheme are appropriate for a pension scheme. Our thematic review found that most SIPP operators failed to undertake adequate due diligence on high risk, speculative and non-standard investments...”
The annex also sets out how a SIPP operator might meet its obligations in relation to investment due diligence. Such obligations could be met by:
- correctly establishing and understanding the nature of an investment
- ensuring that an investment is genuine and not a scam, or linked to fraudulent
- ensuring that an investment is safe/secure (meaning that custody of assets is through a reputable arrangement, and any contractual agreements are correctly drawn-up and legally enforceable)
- ensuring that an investment can be independently valued, both at point of purchase and subsequently, and
- ensuring that an investment is not impaired (for example that previous investors have received income if expected, or that any investment providers are credit worthyetc.)
The underlying assets within the portfolio were corporate bonds, which were a standard assets, providing they had liquidity.
The literature accompanying this portfolio explicitly stated that liquidity was provided in full (on a monthly dealing date) and that the investment was a standard asset. This literature formed part of a financial promotion that was issued by the regulated investment manager.
IM (like all regulated firms) is able to rely on the statements made by other regulated firms, unless it has reason not to. It had no reason, there was nothing to suggest it shouldn't.
IM ensured that the investments were suitable to be held in a pension scheme (met the rules), that financial adviser was authorised and regulated, also that they held the correct qualifications) to advise the client, that the provider of the investment was authorised and regulated to provide its services and that the assets met the definition of 'standard assets'.
We therefore considered we had undertaken our responsibilities. As I have said, we were wrong.
The FOS refers several times in its findings that these investments carried high risk. IM does not disagree with this. Risk is a matter between the adviser and their client. IM had satisfied itself that the investments were suitable to be held within a pension, together with all o fthe other factors above.
The FOS decision, however, treats the investments as 'non-standard assets' on the basis that they did not have liquidity. IM countered that whilst it accepted these investment (c. 12 months) there were 146 separate liquidity requests, each which was met on every occasion. It therefore had not reason to consider liquidity was not presents.
To further cloud this matter, several years later (and after a full investigation by the FCA) it was uncovered that this financial adviser had been acting fraudulently. The forms seen by IM had been falsified by the financial adviser.
IM had absolutely know way of knowing this, but the FOS highlighted that on the client's SIPP application form his occupation and salary did not suggest he would have the financial resources and experience set out on the investment form.
The process at IM is that one team (new business) would process SIPP applications and another team (transactions) would process the underlying investments. There was not only two different teams, but also several months between the two forms.
IM was therefore deemed fully responsible for the resultant position of the client.
Whilst everyone will have an opinion on this, the only opinion that matters is that of the FOS. Its decision is made and the FCA is simply applying this.
IM has, I have said before, accepted this decision and decided not to pursue Judicial Review over the decision.
There is really nothing more I can add.
Mr Pointy said:
How do you know they didn't carry out sufficient due diligence?
This is the crux of the matter, "sufficient" is objective and there is no definition. There are example, but IM considered it had met and gone beyond all of these.FOS ruled that it hadn't and therefore IM's due diligence was not "sufficient".
Without a line our boundary no SIPP provider can be sure that whatever they did it would be considered as being sufficient.
The only certainty is that the FOS is the arbitrator of this and has ruled. IM has accepted.
For what it's worth Julian as a layman I can see both sides of this.
I read the Ombudsman's ruling and I think it's plain English enough that I can see how and why they came to the conclusion that they did.
From what I think I understand of your obligations I can also see how and why you might have taken the view you did.
Guess that's why there's an Ombudsman
I read the Ombudsman's ruling and I think it's plain English enough that I can see how and why they came to the conclusion that they did.
From what I think I understand of your obligations I can also see how and why you might have taken the view you did.
Guess that's why there's an Ombudsman
Ken_Code said:
I find it quite odd that anyone with responsibility for anything in a financial company would think this way, think that because a firm that you are dealing with is authorised for that business that this absolves you of your requirement to do your due diligence.
You seem to still be trying to suggest that your firm hasn’t done anything wrong here, and unwilling to learn from it.
IM does not consider itself to be absolved of anything, quite the opposite. You seem to still be trying to suggest that your firm hasn’t done anything wrong here, and unwilling to learn from it.
It due diligence was to ensure all the points I have referenced. This was evidently not enough.
It is abundantly obvious that the firm has done something wrong or else it would not be in the position it is in and I would not be here explaining this. Why you would suggest otherwise is quite beyond me.
EddieSteadyGo said:
I've mentioned earlier that I consider the FCA can sometimes be inclined to be over-zealous in order to find someone to blame, so I do have some sympathy for what has happened to IM.
But I did have a few questions I was wondering about - I'm not asking these to be salty or a smart-arse, but if I was interested in the logic as to why you accepted these companies, who turned out to be dodgy, onto your platform.
When you decided to allow these companies to offer their products/services on your SIPP platform, did you know anything about the reputation of the individuals running those companies? Was there any information in the public domain which would have suggested that they could turn out to be dodgy? And were the other big boys in the SIPP market allowing their customers to invest via these companies? If not, why was that? And I presume a firm needs to pay a fee or commission to gain access to your platform - were the fees these companies were offering higher than normal?
I agree with everything you said in your previous post, btw.But I did have a few questions I was wondering about - I'm not asking these to be salty or a smart-arse, but if I was interested in the logic as to why you accepted these companies, who turned out to be dodgy, onto your platform.
When you decided to allow these companies to offer their products/services on your SIPP platform, did you know anything about the reputation of the individuals running those companies? Was there any information in the public domain which would have suggested that they could turn out to be dodgy? And were the other big boys in the SIPP market allowing their customers to invest via these companies? If not, why was that? And I presume a firm needs to pay a fee or commission to gain access to your platform - were the fees these companies were offering higher than normal?
We knew Novia (now Wealthtime) as it is a mainstream player (Novia provided the platform for the portfolio).
There are a multitude or investment managers and thousands of financial advisers out there and so our approach with these is always to check their credentials by ensuring they are authorised and regulated by the FCA to carry out their activities (and in the case of the adviser, that they hold the relevant pension transfer qualifications to provide the advice).
IM had no reason to consider anything was suspicious or amiss with either the adviser or the investment manager (this was several years ago) and let's not forget that neither did the FCA.
Many other SIPP providers were also working with these firms and there was nothing to suggest IM should not (I believe the FOS decision actually references this).
No firm pays any fee or commission to access our SIPPs (the platform was Novia/Wealthtime, not IM). Our only charge/revenue was the £150 a year to the client for administrating their SIPP.
Just as an aside here….I imagine most people have investments outside of IM.
Have a Google of how many complaints were raised against them. Quick check on Hargreaves Lansdowne shows several thousand in the last half of last year!
Then think how often the Head of those firms have replied to your questions. I imagine you don’t even know who they are!
IM is quite a unique kind of firm to deal with.
I appreciate that makes me something of a fanboi, & fully expect a branded mug to arrive at my door forthwith
Have a Google of how many complaints were raised against them. Quick check on Hargreaves Lansdowne shows several thousand in the last half of last year!
Then think how often the Head of those firms have replied to your questions. I imagine you don’t even know who they are!
IM is quite a unique kind of firm to deal with.
I appreciate that makes me something of a fanboi, & fully expect a branded mug to arrive at my door forthwith
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