An adviser is fighting for compensation on behalf of a client who was misadvised by an IFA whose bad practice forced a network into liquidation.
Jill Thomas, managing director of Sheffield-based Future Life Wealth Management, said the £97,200 owed to her client would fall on the Financial Services Compensation Scheme after the previous IFA’s network had collapsed due to the claim.
‘My client has not received a penny,’ she said. ‘It will be going to the FSCS [Financial Services Compensation Scheme] levy.’
Thomas’s client had previously been advised by IFA Simon Hulme, currently with Sheffield-based Futures Assured.
Hulme was previously the sole adviser at Nottinghamshire-based Pridemark Financial Services, which was an appointed representative of Derbyshire-based network Unleash Advice Partnership.
In October 2011 the Financial Ombudsman Service (FOS) upheld the complaint against Hulme citing ‘unnecessary churning of policies’.
The client, who did not wish to be named, was advised to pay a total of £10,000 a month into three personal pension plans with Aviva, Scottish Equitable and Scottish Life, to mitigate corporate tax.
The FOS ruled: ‘No evidence was provided to explain why it was necessary to recommend the personal pensions rather than a stakeholder pension and I noted that the investment was to be made into the standard managed funds offered by each provider.’
‘The format of the contributions recommended by Mr Hulme was designed to generate the maximum commission for Pridemark Financial Services, not to provide the best advice to you.
‘The advice given by Hulme was both misleading and unsuitable.’
As a result of the claim Unleash’s professional indemnity insurers raised its premiums to a level the network could not afford, forcing it to apply to the Financial Services Authority to cancel its permissions in January and entering liquidation in February.
Unleash founder and chief executive Andy Adewale declined to comment.
Hulme had not responded to New Model Adviser® at the time of going to press.
The FSCS said it was aware of Unleash but it had not been placed in default.