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Troubled DFM hires claims firm to shift blame on IFAs

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Troubled DFM hires claims firm to shift blame on IFAs

Troubled discretionary fund manager (DFM) Beaufort Securities has written to its clients encouraging them to claim against their IFAs over the DFM’s own investment products.

In a letter seen by Wealth Manager sister title New Model Adviser®, the DFM directed clients to use claims firm Legal Force to see if they have grounds for a compensation claim against their adviser for recommending they invest in Beaufort. At least 10 advisers used the investment firm.

Beaufort Securities, which has this year agreed to two permissions restrictions with the Financial Conduct Authority (FCA), told its clients it wants them to have the ‘best service and advice’.

As such it has carried out reviews to ‘our valued customers’ who invested in Beaufort Securities’ DFM products.

‘Having conducted a review we have concerns that your financial adviser may not have fully informed you of the risks and suitability in accordance with COB rules,’ the letter said.

‘We would like to recommend that you speak to our appointed agents who are licensed to discuss your options and will advise on whether you may have grounds to make a claim.’

This appointed agent is Bournemouth-based claims management firm Legal Force which has a notice about Beaufort Securities on its website.

‘Many consumers were advised by financial advisers to transfer their standard pensions over the last five years into alternative funds such as the Beaufort model,’ the firm’s note says.

'If you have lost money on your pension or are worried about it, we can investigate a claim to get your money back,' the note adds.

The news follows a number of developments with Beaufort Securities.

In January New Model Adviser® revealed the firm had agreed with the FCA to restrict its DFM permissions such that ‘for any of its service to be classed as regulated, it must gain the instructions of its clients or advisers first’.

Following this 10 advice firms spoke to Beaufort Securities’ Sipp partner Gaudi about moving to a ‘preferred alternative’.

The FCA did not reveal why the restrictions were put in place but in Beaufort Securities’ latest financial statements it said the ‘company became aware of possible suitability of investment issues in the DFM department’.

Then last month the firm was hit with a further FCA restriction which meant it can no longer hold client money/assets.

IFA or DFM?

This is also not the first time the DFM has argued the IFA is at fault rather than itself. 

In a FOS decision published in March, which was upheld against Beaufort Securities, the DFM argued the adviser should be held responsible by the FOS for the decision to invest in number of AIM-listed investments.The client was placed into AIM-listed property investments Eastbridge Investments and Carduus which lost the client £71,000.

The FOS said: 'Even if there was some input from the IFA, Beaufort Securities accepts that its DFM had authority to make his own investment decisions.'

Stephen Girling, managing director of IFA SG Wealth Management, said it was a ‘bit rich’ of Beaufort Securities to blame the IFAs when it was its own products involved.

‘This just seems to be the latest in a string of these firms who through unregulated marketing organisations selling products, seems like it will be another compensation scheme pay out which those of us in the good guys are going to have to pay out for,’ he added.

Beaufort Securities declined to comment and a Legal Force spokesman said: ‘We are standing by to help customers in any way we can.’

Legal Force added it will not share any claims fees with Beaufort Securities.

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