The client, Mr B, was nearing retirement age, had modest savings, and had a cautious attitude to risk. He was recommended to switch his pension to a Self-Invested Personal Pension (SIPP) through a discretionary fund manager.
The Two Portafinas
At the time Mr B received financial advice in June 2021, Harbour Rock Capital Ltd was known as Portafina Investment Management Ltd. According to Companies House, the name change to Harbour Rock happened in July 2023.
Rather confusingly, there are two Portafinas, and they are connected:
- London-based Portal Financial Services LLP (formerly known as Portafina LLP between 2009 and 2016), now in liquidation, and
- Kent-based Harbour Rock Capital Ltd (formerly Portafina Investment Management Ltd between 2016 and 2023), still trading.
The first Portafina (Portal) has been making news headlines for a number of years, for all the wrong reasons, including involvement in the British Steel Pension Scheme scandal. Its practices have resulted in hundreds of complaints to the Financial Ombudsman Service (FOS) regarding pension transfer advice, which led to the firm cancelling its Financial Conduct Authority (FCA) permissions and stopping taking on new business.
The Financial Ombudsman Service is an independent, government-backed body that resolves disputes between financial services providers like Portafina LLP/Portal Financial Services LLP and their customers.
The Financial Conduct Authority is the financial industry’s watchdog, whose rules and guidelines all registered financial services providers must abide by.
According to one report, the second Portafina (Harbour Rock) started taking on new business from its ‘sister company’ around the same time Portafina/Portal stopped. Clients of Portafina/Portal received a letter saying, “Portafina Investment Management is better placed to deal with this matter in the future and offers additional efficiencies and benefits to you, at no extra cost.” The letter did not mention why the firm was restructuring or anything about the FOS complaints.
The independent lifeboat scheme, the Financial Services Compensation Scheme (FSCS), said it would be prepared to step in and pay compensation for claims against Portal Financial Services LLP, which entered compulsory liquidation in January 2023.
But what about clients of Portafina Investment Management (Harbour Rock)? Over 70 successful complaints are listed on the FOS website under ‘Ombudsman decisions’, relating to pension transfer and investment advice. Sadly, what happened to Mr B is not unique.
Mr B’s story
+ −In June 2021, Mr B was a cautious investor, 61 years old, single, with no financial dependants. His pension was worth just over £36,000 and included a final bonus payment. He had £12,000 in savings, no debts and wanted to access his retirement benefits when he reached 67.
Portafina/Harbour Rock recommended that Mr B switch to a Self-Invested Personal Pension (also known as a SIPP). SIPPs can offer a flexible retirement investment method, allowing access to different fund types.
Mr B was advised to invest in a particular portfolio (Parmenion SIPP) through a Discretionary Fund Manager who would manage the funds on Mr B’s behalf.
Mr B was told this arrangement would offer him better service, transparency, flexibility and peace of mind. He was also promised lower charges and access to his existing pension’s final bonus, worth some £20,000.
In addition to an initial advice fee of over £1000, Mr B was told he would pay almost 1.5% annually for ongoing management and platform fees (around £500 annually, based on the then-current transfer value).
Mr B accepted the advice and went ahead with the switch but complained to Portafina/Harbour Rock two years later. His claim for unsuitable advice was rejected, so Mr B escalated his complaint to the Financial Ombudsman Service.
Financial Ombudsman Service investigation
+ −The Financial Ombudsman Service (FOS) investigation was in two parts, an initial review and decision by a FOS Investigator, and a final decision by an Ombudsman.
The FOS Investigator agreed with Mr B’s complaint, saying that Mr B’s circumstances and needs didn’t warrant a Discretionary Fund Manager. The additional fees incurred were likely to eat into his modest pension fund and he did not need the added flexibility that the new SIPP offered. Indeed, the new fund was far higher up the risk scale than was appropriate for Mr B’s needs, leading the Investigator to conclude that Mr B’s existing pension fund would have been sufficient.
Portafina/Harbour Rock disagreed, and the case was sent to an Ombudsman for a final decision. The Ombudsman agreed with the Investigator and ordered that Mr B be compensated fairly, based on a comparison of Mr B’s current investment value with the notional value of his previous pension had he remained in that scheme. If the current value is less than the notional value, compensation would be due, plus interest. Mr B was also awarded £350 for the trouble and upset caused to him by the unsuitable financial advice.
SIPP mis-selling claims
+ −Self-Invested Personal Pension (SIPP) mis-selling can be the result of:
- Investing in funds that are unsuitable for your needs, e.g. they are higher risk or have excessive charges/fees
- Your financial adviser failing to properly inform you of the reasons for changing your investments
- The value of your SIPP pension falling, despite assurances from your adviser that it would increase
If you think you have been mis-sold a SIPP, you can complain to the SIPP provider or financial adviser directly. If you disagree with their decision, you can take your claim to the Financial Ombudsman Service for independent adjudication.
If your financial adviser or SIPP provider has gone out of business, it may still be possible to make a claim through the Financial Services Compensation Scheme (FSCS), a lifeboat scheme that can award compensation of up to £85,000.
TLW Solicitors’ view
+ −Sarah Spruce, Partner and Head of the Professional Negligence team at TLW Solicitors, says:
“SIPPs can offer increased flexibility in terms of the number and type of investments you can enter into, but they are not suitable for everyone. People’s circumstances are all different, from their age and income, their appetite for risk, to their lifestyle and retirement plans. Anyone considering transferring an existing pension to a SIPP should seek a second opinion. Unfortunately, we have seen time and time again that unsuspecting investors are persuaded to move their pension pot into funds that aren’t right for their needs, costing them more in fees, exposing them to more risk than they are comfortable with, and often resulting in loss of funds.
Our team is experienced in taking claims to FOS and the FSCS, helping you navigate the complex legal and financial jargon and keeping the momentum going. Contact us for a no-obligation chat and explore your options.”
SIPP mis-selling claims specialists
+ −TLW Solicitors are specialists in SIPP mis-selling and pension transfer mis-selling cases. Our claims team will assess your case and decide whether we can assist you on a no-win, no-fee basis. If we proceed with your claim, and the case is unsuccessful for any reason, you will not be charged for the work that we have done.
Get in touch
+ −If you’re concerned about your SIPP investments, please call us on 0800 169 5925, email info@tlwsolicitors.co.uk or complete one of the forms below. Our team will contact you for an initial, no-obligation consultation.
It is important to get advice as soon as possible as strict time limits can apply.
Minimum case values apply.
Meet Our Team
Meet Sarah, who heads up our Mis-Sold SIPP Compensation Claims team.
Sarah and her colleagues are on hand to help with your claim.
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