A man who lost his pension savings in a high-risk investment scheme has successfully had his complaint upheld by the Pensions Ombudsman. Rowanmoor Trustees Limited has been ordered to compensate him £1,000 for distress and reinstate up to £46,000 into his pension fund.
The case revolves around Mr N, who transferred £56,732 from his pension in late 2015 to invest £46,800 into a 25% share of a hotel development in Cape Verde, promoted by The Resort Group. The recommendation came via an unregulated introducer, and the investment was managed through a small self-administered scheme (SSAS) with Rowanmoor acting as a co-trustee.
Unfortunately, the investment proved to be illiquid and did not generate any meaningful returns. Mr N described the investment as pretty much worthless in terms of funding his retirement, ending up with a significant loss of his pension fund.
The Pensions Ombudsman concluded that Rowanmoor Trustees Limited failed in its roles and responsibilities as a trustee because it made an investment which was speculative and took risks. However, the administrative complaints against Rowanmoor were dismissed.
Trustee Failures Highlighted
The Pensions Ombudsman determined that Rowanmoor Trustees Limited, as a professional trustee, breached its duty of care. By permitting the scheme to allocate the majority of its assets to a single, high-risk investment, the trustee failed to act in Mr N’s best financial interests. The lack of diversification and consideration of Mr N’s financial situation were key failings identified in the case.
The Resort Group had had various Investmet propositions many of which were marketed as commercial property Investments but were ultimately deemed as Unregulated Collective Investment Schemes (UCIS), which as designated Investments are wholly unsuitable for retail investors. This represented a lack of adequate due diligence on the part of Rowanmoor Trustees Limited, which is one of the primary duties as trustees of the pension scheme.
Pensions Ombudsman Dominic Harris stated:
“Investing the majority of the scheme’s assets in such a speculative development was highly irresponsible. Given the lack of diversification, the member’s circumstances, and the knowledge available at the time, this was a decision no reasonable trustee would have made. It reflects a failure to meet the standard of care required under trustee responsibilities.”
The Ombudsman also criticised the trustee for neglecting to adequately assess whether the investment was suitable. He added that Rowanmoor Trustees Limited had a clear obligation to protect Mr N’s pension but failed to uphold this duty, amounting to maladministration.
Steps Ordered by the Ombudsman
The Pensions Ombudsman instructed Rowanmoor Trustees Limited to calculate the financial losses Mr N incurred and reimburse the scheme accordingly. This should restore Mr N to the financial position he would have been in if the investment had not taken place. In addition, Rowanmoor was ordered to pay £1,000 to Mr N for the emotional distress and inconvenience caused by their negligence.
This decision underscores the critical role of trustees in safeguarding pension schemes and ensuring that investment decisions align with members’ best interests. It also serves as a reminder of the risks associated with unregulated introducers and high-risk investment schemes.
Our Thoughts
Whilst this is a great result for Mr N, the decision and the enforcement are two separate events. Whether Rowanmoor Trustees have sufficient capital to settle this claim remains to be seen and as they are not regulated by the FCA there will not be the safety net of the Financial Services Compensation Scheme (FSCS).
We hope that Mr N gets the full redress he is entitled to.
Think you or somebody you know may have been affected by a similar failure on the part of the pension company or pension trustees? Claim My Loss help will do all we can to help get you the compensation or financial redress you deserve.
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