Rowanmoor Declared in Default After Successful FSCS Claim

The troubled Self Invested Personal Pension (SIPP) provider, Rowanmoor, has been in the news for several years. It closed its doors to new business in August 2020, after which large numbers of claims against the firm were submitted to the Financial Ombudsman Service (FOS) for consideration. FOS is the independent organisation whose job it is to resolve disputes between financial institutions and their clients.

A sample case was investigated during 2021, involving a Rowanmoor client, Mr T. He had been ‘advised’ to invest in an unregulated offshore property deal involving Cape Verde-based The Resort Group and lost his pension savings. The FOS investigation revealed that an introducer firm, CIB Life and Pensions Ltd, was passing a large number of clients on to Rowanmoor, making up over a quarter of Rowanmoor’s business between 2009 and 2013.

Neither firm admitted responsibility for giving Mr T financial advice, stating that he signed papers to say he would seek his own independent advice elsewhere. FOS disagreed, saying that Rowanmoor should have followed published guidelines from City watchdog, the Financial Conduct Authority (FCA), so they would be able to demonstrate due diligence and risk management (regarding how they accepted new business and recommended the investments they offered) but, above all else, they should have treated Mr T fairly.

As Mr T’s complaint was successful, FOS ordered Rowanmoor to pay him compensation. FOS also asked Rowanmoor to close the SIPP fund, so that other investors did not have to continue paying wrapper fees.

Now that the door was opened for other investors, many more claims were submitted to FOS. The Government-backed lifeboat scheme, the Financial Services Compensation Scheme (FSCS) stepped in on 31st August 2022, agreeing to take over the FOS claims and to investigate Rowanmoor’s demise.

Rowanmoor went into administration in August 2022 but has only now been declared in default.

When a financial organisation is declared in default, it means that the FSCS has assessed whether or not the firm is able to satisfy claims against them and decided that it cannot. Compensation for investors will come from the FSCS.

Mis-selling is where the risks of transferring an existing pension to a Self-Invested Personal Pension (SIPP) are not investigated or explained fully by a financial adviser, resulting in financial loss. People who have occupational pensions, such as those in the public sector or nationalised industries, have been particularly affected.

SIPPs can be a tax-efficient way of saving for retirement, but given the wide variety of investment products available, getting the right financial advice is key. Unfortunately, many people – including those who did business with Rowanmoor – received unsuitable advice, causing them to invest in risky or unregulated investments and have lost out.

Sarah Spruce, who heads up TLW’s Pension Mis-Selling Claims team, says:

“Thousands of investors have been affected by the actions and subsequent failure of Rowanmoor, The Resort Group, introducer firms and other independent financial advisers, and we are already working with many people who have been impacted. The delay caused by the FSCS investigation has been frustrating, but now people’s cases will finally be able to progress to the claims processing teams.

“Even if you previously made a complaint to Rowanmoor and it has been rejected, or if FOS rejected your complaint, please get in touch as we may still be able to help.”