In the case against Openwork, the ombudsman dismissed the argument that ‘Mr M’ could be considered as an insistent client.

The client complained that he received unsuitable advice from an appointed representative, claiming he should not have been advised to transfer his pension funds to a Sipp.

He said he wouldn’t have gone on to use his pension funds to buy an unregulated overseas investment with Harlequin Property if Openwork had given him “suitable advice”, the FOS report stated.

Mr M “believes he has lost all of the money he invested” after “Harlequin experienced difficulties”, the FOS reported.

The client transferred his existing pension to a Sipp after he met with the appointed representative in 2009.

The Sipp received a transfer amount of just over £111,000 in February 2010.

In March 2010, £30,025 was transferred from Mr M’s Sipp to Harlequin and in November 2010, £50,000 was transferred from the Sipp to a Sterling Investment Account, to be invested in Gartmore’s Cautious Managed fund.

By the end of November 2010, the cash balance of Mr M’s Sipp was just under £22,000.

According to the FOS report, Openwork accepted that Mr T did advise Mr M to transfer his pension to a Sipp and when Mr T gave the transfer advice, he did not consider whether Harlequin was suitable for him.

The company accepted that Mr T should not have advised him to transfer to a Sipp without also considering the suitability of the underlying investment.

But it failed to offer to pay compensation to Mr M because “it was satisfied that Mr M would still have gone ahead with the Harlequin investment, regardless of any failings on the parts of Openwork or Mr T”. Openwork stated it understood that Mr M was acting on the advice of his daughter, Miss M, who worked in financial compliance at the time.

The FOS disagreed with Openwork’s interpretation.

Ombudsman Laura Colman ruled: “I do not think Openwork is right to say that Mr M would have gone ahead with this investment on an insistent client basis. Instead, I think that if Mr T had given suitable advice (or, alternatively, no advice at all) Mr M would have chosen not to transfer his pension. In that case, he would not have been able to invest in Harlequin.

“Although Openwork has suggested Mr M might have gone ahead on an ‘insistent client’ basis, that is not what actually happened. Mr M was not told that Harlequin was unsuitable for him, and he was not given the opportunity to decide whether to go ahead on an ‘insistent client’ basis.

“In the overall circumstances, it is fair and reasonable for Openwork to be held responsible for all of the losses Mr M suffered as a result of transferring his pension.”

Openwork was told to only pay compensation in respect of:

• Mr M’s initial £30,025 investment in Harlequin
• Past Sipp fees (because the FOS said he’d not have had a Sipp at all if not for the unsuitable advice, and the Sipp fees were likely to have been higher than the fees he was paying for his previous pension arrangements)
• Future Sipp fees for the next five years
• Distress and inconvenience.

The company was asked to pay Mr M £300 for “the trouble and upset caused”.