Six-month Delay for Rowanmoor Claims, says FSCS

The Financial Ombudsman Service is an independent body set up to settle disputes between financial businesses and their customers. The service received so many complaints about Rowanmoor that it decided to investigate a ‘sample case’ relating to a complainant called Mr T. Mr T’s occupational pension was transferred into a Rowanmoor SIPP, after being referred by an introducer firm, CIB Life and Pensions Ltd.

CIB claimed it had not given Mr T any financial advice and asked him to sign papers to that effect. Rowanmoor said it worked on an ‘execution-only’ basis, thereby avoiding any need to offer Mr T financial advice. FOS disagreed and said that Rowanmoor should have carried out much greater due diligence checks in relation to CIB’s role in informing customers about investments and what regulated financial advice they had been given. This would have flagged up a number of issues around whether Rowanmoor could accept CIB’s business and how the recommended investments could affect investors’ financial security.

The lack of due diligence on Rowanmoor’s part was a key factor in the January 2022 FOS decision that Mr T had not been treated fairly and should be compensated for his losses. This, in turn, opened the doors for many other similar claims.

Rowanmoor went into administration last summer as a result of the huge number of complaints against it and the fact that it could not afford to pay out compensation if they were all successful.

When financial firms fail, the Financial Services Compensation Scheme (FSCS) can agree to step in and pay compensation up to a current limit of £85,000 per individual. The Government-backed lifeboat scheme opened claims against Rowanmoor on 31st August 2022. Claims that had initially been lodged with FOS were expected to be transferred to the FSCS and by the first week in September 2022, the number of claims against Rowanmoor was reported to stand at over 3000.

In the latest update, the FSCS has said that claims against Rowanmoor will be on hold for at least another six months. The FSCS investigation is still ongoing, with documentation being gathered in relation to what went on at Rowanmoor. Claimants were told that, only after all the investigations were complete, would their claims be moved on to an assessment team.

The FSCS has said its investigation is not duplicating work done by FOS but needs to look at claims using the scheme’s own rules. One important difference is that, when reaching a decision, the Ombudsman considers what would have been a fair and reasonable way of treating an investor according to industry practice at the time, whereas an FSCS decision considers whether there is a civil liability owed by Rowanmoor to the investor.

Sarah Spruce, Head of the Mis-Sold SIPP Compensation Claims team, says:

“We’ve been following Rowanmoor’s demise over a number of years and are working with many investors who have been affected. I know they will feel frustrated by the latest news, but the FSCS investigation is very complex and must be completed before any claims can be assessed. With the cost of living crisis upon us, many people will be feeling anxious about having enough in their retirement fund, but we just have to ‘sit tight’ for now. The FSCS has said it will update investors again in a couple of months’ time.”