Advisers will pay out over a Welsh advice firm that New Model Adviser® revealed last year had been accused of holding 'clear conflicts of interest' by the Financial Ombudsman Service (FOS), after it was declared in default.
In total 12 complaints against Cardiff-based Cumulus Investment Management, all of which relate to advice given to clients to transfer their pensions into an Eastern European property fund.
Cumulus Investment Management, which was dissolved via compulsory strike-off in June last year, was one of a number of advice firms listed in default by the Financial Services Compensation Scheme (FSCS).
As a result advisers will foot the bill for complaints in the form of FSCS levies. In the last year alone the lifeboat fund has asked advisers for the maximum £100 million levy in order to fund complaints about Sipp investments.
The complaints related to clients being encouraged by an unregulated introducer to transfer their pension pots into a Sipp, which was then invested in an Eastern European property fund which shared directors with the advice firm.
In one decision notice, ombudsman Roy Milne lambasted the firm's 'clear conflict of interest'.
He said: 'The fund prospectus explains how the charges and fees would be paid. Clearly, the directors stood to gain by increasing the value of the fund.'
The firm was told to cease all regulated activity by the Financial Conduct Authority.
Another Cardiff-based firm, Park Grove Financial Management, which had its permissions cancelled after failing to pay the £5,722 it owed the regulator in fees and levies, was also on the list.
Other advice firms in default were Kent-based Aspen Financial Planning and Northern Ireland-based M&P Financial Planning.