The successful TLW client held a local government pension worth over £115,000 and was persuaded to transfer it into a high-risk SIPP with Berkeley Burke.
Our client was a 45-year-old local government employee earning a modest income as a Business Manager and living in a house with a mortgage. In 2013, a financial adviser contacted her and offered a pension review.
“I was told that I could transfer my pension fund into a SIPP and that this would increase the value of my pension more than the existing arrangements, so that when I came to retire, my pension fund would have grown significantly…I have never made any investments before and would refer to myself as a low-risk investor.”
Our client filled in the paperwork in September 2013, and the pension transfer was completed the following month, with monies being deposited into a Berkeley Burke Self-Invested Pension Scheme (SIPP). A SIPP is a ‘do-it-yourself’ pension which offers much more choice and flexibility in investment funds. In November of the same year, £40,000 was invested into Dolphin Capital. In January of the following year, £69,750.00 was invested into Store First.
Dolphin Capital
Investors in Dolphin Capital (also known as Dolphin Trust or German Property Group) had been promised returns of 10% over two years. Their money was used in the development of listed buildings in Germany into luxury apartments. They should have received a rental income from the share of the building they ‘owned’ and then get their money back, plus interest, at the end of the investment period. Many schemes failed, the company was declared bankrupt, and investors were eventually told they would only receive 10% of their original investment.
Store First
Store First sold storage pods to investors, who were also given the option to sub-lease the pod back to the company in return for rental income. They were promised ‘guaranteed’ returns of 8-10%, however hidden costs and unexplained charges left many seeing their investment value fall. The company was wound up in 2019, and in 2020, investors were told they could surrender their storage pod and liability of business rates, but no payment would be returned to them. In effect, their investment was being ‘written off’ – worthless.
Subsequently, both investments were found to be high-risk and illiquid and have since failed. The Financial Services Compensation Scheme (FSCS), a lifeboat fund for customers of failed firms, has stepped in to compensate clients of Berkeley Burke.
Asking for help – financial mis-selling specialists
+ −Our specialist financial mis-selling lawyers conducted an initial, no-obligation assessment of the case and agreed to help her with her claim. In the FSCS application for compensation, she argued:
“The pension transfer and subsequent investment in Dolphin Capital and Store First were clearly unsuitable for me and Berkeley Burke (The Firm) are negligent for allowing my pension transfer and subsequent investments to go ahead. The Firm had a duty to me to treat me fairly and to take reasonable care to organise and control my affairs responsibly and effectively, ensuring that adequate risk management systems were in place.”
Emily Barr from TLW Solicitors was the legal specialist assigned to this case. Emily is no stranger to financial mis-selling claims, having worked on numerous similar cases and was featured in the BBC1 documentary series, Northern Justice.
Emily advised her client on what was considered the best industry practice back in 2013. The financial services watchdog (the Financial Conduct Authority, or FCA) had been trying to review and improve SIPP administration since 2009.
The FCA published new guidelines in 2012 and conducted a further review in 2014. It wrote to SIPP operators to remind them of the duties already incumbent on them. This letter noted that all firms must conduct their business with due skill, care and diligence. However, it was the case that, in 2014, most SIPP operators still failed to carry out adequate due diligence on high-risk, speculative or non-standard investments, clearly a long-term and systemic problem within the industry at the time.
The FSCS’ initial response
+ −Initially, the FSCS rejected the case. They wrote to our client stating that they had found evidence that another company was involved in providing advice relating to the investments and, as it was still trading, any complaint must be taken there in the first instance.
We disagreed with the FSCS decision and helped our client appeal it.
New evidence and an appeal
+ −We therefore wrote back to the FSCS, arguing that there was minimal evidence of another firm’s involvement and confirming that, at the outset of the claim, we had written to that firm to investigate its involvement in our client’s transfer and advice. We enclosed evidence that the company had responded, confirming it did not hold any evidence of documentation under the client’s name. There was also no evidence that our client had ever paid that company for advice or had any direct contact with it. As such, we were correct in taking our claim to the FSCS.
The FSCS replied with a new decision – they were going to pay our client compensation!
In their letter, they said:
“You have a valid claim against Berkeley Burke SIPP Administration Limited (the Firm).
This means we can pay you £85,000 in compensation.
We have calculated your total loss as £98,709.60. Our compensation limits don’t allow us to pay more than £85,000 per customer, per firm.
We obtained the entirety of the records held for your Berkeley Burke SIPP from Hartley Pensions (who now administer the former Berkeley Burke SIPP Scheme).
This was to ascertain if the Firm failed in their due diligence requirements to you, as their client by giving you adequate risk warnings about the nature of the investment in Dolphin Capital and Storefirst before allowing them to go ahead in your SIPP.
We’ve concluded that the Firm failed in its due diligence requirements and did not adequately explain to you the risks associated with your investment in Dolphin Capital and Storefirst.
For this reason, we have upheld your claim.”
This was a great result for our client, who was able to begin thinking about her retirement plans once more.
The calculated loss was less than the original amount transferred, as it accounted for a small rental income she had received when she held her investments, and their notional value.
TLW Solicitors’ point of view
+ −Sarah Spruce, Legal Director, said of the team’s result:
“Emily Barr has helped many clients recover money they thought was lost forever. Whether it be an investment or pension, her skill is forensically pulling together all the relevant information the FSCS needs to base their decision upon. She is determined to do her best for her clients and is a real asset to our team.
In this case, the pension transfer happened over a decade ago, and we were mindful of time limits that can apply in these cases. There was no time to waste, and keeping in regular contact with the FSCS to resolve her case was important. That’s why having a professional by your side can pay off – had our client not asked for our help, she could have missed key deadlines and had her case rejected completely.”
Pension transfer and SIPP mis-selling specialists
+ −TLW Solicitors has a team of specialists dealing with financial mis-selling and consumer claims on a daily basis. If you or a loved one have transferred out of a workplace pension into a Self-Invested Personal Pension and lost defined benefits and other valuable advantages, please get in touch.
We can review your case on a confidential, no-obligation basis and determine whether the advice you received to transfer your pension was inappropriate. If so, we work on a no-win, no-fee basis, meaning that if the case is unsuccessful, you will not be charged for the work that we have done.
Contact TLW Solicitors for help
+ −If you are concerned that you or a loved one were not given the right advice about transferring a pension or investing in a SIPP, please call us on 0800 169 5925 or fill in one of the forms below, and our team will contact you to explore your options.
It is important to get advice as soon as possible, as strict time limits can apply.
Minimum case values apply.
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