Turnberry Wealth Management – which entered liquidation on 27 March – has lost at least three cases at the Financial Ombudsman Service (FOS).
The FOS ruled the IFA advised clients to invest in high risk unregulated schemes that were unsuitable for them.
One was an investment in a scheme that could have resulted in 100% loss of capital, in order to reduce the client’s tax liability.
In another case, Turnberry recommended a client borrow money to invest in an unregulated scheme, also to save tax, that would leave the client with about 50% of his non-pension assets in unregulated investments.
The third case the FOS upheld against Turnberry involved a client being advised to invest in three unregulated collective investment schemes (UCIS), three years before she planned to retire without a personal pension.
Representatives for Turnberry claimed the then regulator, the Financial Services Authority, reviewed Turnberry’s promotion of specific UCIS in 2010, and found no issues.
The now Financial Conduct Authority (FCA) had not responded to questions about this claim at the time of writing – but in any case the FOS was not satisfied it was enough of a defence, and ruled Turnberry must pay the clients back what they had lost.
How much Turnberry owed the three clients where the FOS decisions have been published is not clear, as the amounts they invested have been redacted from the decisions.
But in one case, the adviser was reportedly ordered by the FOS to repay a client £15,000.
In another, the client took legal action against Turnberry for failure to pay the FOS-ordered redress. The total sum now due to the client from Turnberry is £83,000, according to their lawyers, Regulatory Legal.
It is understood this action, and the other outstanding claims, led to the directors of Turnberry declaring the firm in liquidation.
The claims will now fall on the FSCS – and therefore levy payers – once the FSCS has officially declared Turnberry in default, which, at the time of writing, it had not.
The FSCS has already been forced to slap a £20m interim levy on life and pensions intermediaries as it deals with “bad” self-invested personal pension (SIPP) advice.
Pensions liberations
The FOS claims against Turnberry do not represent its only link to censure.
According to documents seen by Professional Adviser, in 2013 Turnberry director Martin Brown was embroiled in a pension liberation scandal.
Five pension schemes run by Marley Administration Services had their assets frozen as part of The Pensions Regulator’s (TPR) clampdown on suspected pension liberation.
Brown was acting as trustee of the schemes, and director of the sponsoring employer, Turnberry Wealth, and the administrator, Marley.
During its investigations, TPR found a ‘Q&A document’ on the desk of a Turnberry Wealth employee who said he was a paraplanner, that pointed to clients being misled about the tax penalties for taking their pension early.
“This document appeared to be a list of answers to common questions that might be raised by potentially transferring members and appeared to give an inaccurate answer regarding questions on tax penalties and transactions which may be unlawful under current legislation,” TPR said.
Echoing the FOS judgements against Brown, TPR also raised concerns that the pension scheme set up by Brown “might be concentrating investment in high risk assets”.
TPR added that Brown had sought to mislead it about the extent of his skill and knowledge by indicating, amongst other claims, that he had almost completed the trustee’s “toolkit”.
TPR’s records indicated that Brown had never had an online account that would have allowed him to access the toolkit.
There was also evidence Brown did not have the required standard of knowledge and understanding to be a trustee of an occupational pension scheme, according to TPR’s investigations.
