Who to pursue? IFA or Company

Frodo1032

I was unfortunate to have invested in some Stirling Mortimer Property Funds back in 2008-2009 amounting to around 50k which had collapsed a few years back.

These were advised to me by my IFA who I am still with to this day.

A friend had checked for me on these funds and said I could should get compensation as they should never have been sold to me in first place.

My IFA has never told me about this, in hindsight he never really gave me any updates on the funds and brushed it over when I asked him for them. I never did push it as I could see the fund values on my online portfolio so thought just had to wait till maturity.

I'm not quite sure how to approach this. Do I raise this with him, but i'm not sure I trust him any longer considering the news articles from the FT my friend has shown me about these funds and my online portfolio is still operated by him. It seems a claim can be made on the FSCS website but my friend says its only if the IFA is no longer operating?

So my IFA is operating, looking at the paperwork he was with Positive Solutions at that time, its now renamed to Quilter, but he had moved over to another company after the funds we purchased. So do I contact Positive Solutions/Quilter about this or will they not be interested, or do I contact his current company? or raise it with him directly but would he fear being sued?

Really don't know how best to approach these and appreciate any thoughts on this.

Marcon

Frodo1032 said:

I was unfortunate to have invested in some Stirling Mortimer Property Funds back in 2008-2009 amounting to around 50k which had collapsed a few years back.

These were advised to me by my IFA who I am still with to this day.

A friend had checked for me on these funds and said I could should get compensation as they should never have been sold to me in first place.

My IFA has never told me about this, in hindsight he never really gave me any updates on the funds and brushed it over when I asked him for them. I never did push it as I could see the fund values on my online portfolio so thought just had to wait till maturity.

I'm not quite sure how to approach this. Do I raise this with him, but i'm not sure I trust him any longer considering the news articles from the FT my friend has shown me about these funds and my online portfolio is still operated by him. It seems a claim can be made on the FSCS website but my friend says its only if the IFA is no longer operating?

So my IFA is operating, looking at the paperwork he was with Positive Solutions at that time, its now renamed to Quilter, but he had moved over to another company after the funds we purchased. So do I contact Positive Solutions/Quilter about this or will they not be interested, or do I contact his current company? or raise it with him directly but would he fear being sued?

Really don't know how best to approach these and appreciate any thoughts on this.

If your complaint is about poor advice, then your starting point is the adviser who gave that advice. You usually need to do so within 6 years of the event about which you are complaining (or when you could reasonably have been aware of it, if later).

You say they should never have been sold to you in the first place, so make sure you include your reasons for that statement in your complaint. The fact things didn't turn out as you hoped isn't a good reason, albeit an understandable one!

Give your adviser a chance to explain himself before you conclude you can't trust him...

Voyager2002

You could ONLY get compensation if the investment was not appropriate for you. In other words, if you had told the advisor that you wanted low-risk investments but you were sold something that offered the prospect of high returns with high risk then you can expect to be compensated. If, however, you made a low-risk investment that surprised everyone by failing then no compensation would be due.

Try to remember what you told your IFA, and what they said about this investment. If you still believe that you were misadvised then make contact either with the individual or the company that employed them at the time and politely ask them to investigate the possibility that mis-selling occurred.

dunstonh

A friend had checked for me on these funds and said I could should get compensation as they should never have been sold to me in first place.

Unregulated high risk investments were a problem for a small number of firms back then.   They were only sold by around 1% of firms, but those that did tended to sell them a lot.  

In itself, there is nothing wrong with unregulated investments but they have to be for the right person and with sensible limits.   For example, if it was say 5% of the overall portfolio then that isn't going to be a problem.   If it was most or all of the portfolio then it is.    However, for the vast majority of low knowledge consumers (i.e. the mainstream), unregulated investments like that are considered a bad thing.   

So my IFA is operating, looking at the paperwork he was with Positive Solutions at that time, its now renamed to Quilter, but he had moved over to another company after the funds we purchased. So do I contact Positive Solutions/Quilter about this or will they not be interested, or do I contact his current company? or raise it with him directly but would he fear being sued?

This means he is networked FA and not an IFA.   Positive solutions was bought by Intrinsic and rebranded to Quilter.   They don't have IFAs.   They have appointed reps who are restricted FAs.   Nowadays, they only sell Quilter products and investments although some have a small panel they can use.

You contact Quilter as they control complaints about their members.       
If the £50k was less than 5% of your portfolio, then there isn't really a complaint.   If its a larger amount, then there is.
Normally, I would say contact the adviser first to see what they say but with a networked adviser and it being unregulated investments, there is no point.  

Marcon

dunstonh said:

A friend had checked for me on these funds and said I could should get compensation as they should never have been sold to me in first place.

Unregulated high risk investments were a problem for a small number of firms back then.   They were only sold by around 1% of firms, but those that did tended to sell them a lot.  

In itself, there is nothing wrong with unregulated investments but they have to be for the right person and with sensible limits.   For example, if it was say 5% of the overall portfolio then that isn't going to be a problem.   If it was most or all of the portfolio then it is.    However, for the vast majority of low knowledge consumers (i.e. the mainstream), unregulated investments like that are considered a bad thing.   

So my IFA is operating, looking at the paperwork he was with Positive Solutions at that time, its now renamed to Quilter, but he had moved over to another company after the funds we purchased. So do I contact Positive Solutions/Quilter about this or will they not be interested, or do I contact his current company? or raise it with him directly but would he fear being sued?

This means he is networked FA and not an IFA.   Positive solutions was bought by Intrinsic and rebranded to Quilter.   They don't have IFAs.   They have appointed reps who are restricted FAs.   Nowadays, they only sell Quilter products and investments although some have a small panel they can use.

You contact Quilter as they control complaints about their members.       
If the £50k was less than 5% of your portfolio, then there isn't really a complaint.   If its a larger amount, then there is.
Normally, I would say contact the adviser first to see what they say but with a networked adviser and it being unregulated investments, there is no point.  

I appreciate why you've said what you've said, but given the ongoing relationship, isn't that a 'reasonable reason' to start by contacting the adviser themself?  If there are no valid grounds for a complaint, it would be far harder to salvage the relationship if OP doesn't do that but just goes over the adviser's head to Quilter. Is there any reason why OP shouldn't start with contacting the adviser and (say) asking them to 'refer as appropriate'?

dunstonh

I appreciate why you've said what you've said, but given the ongoing relationship, isn't that a 'reasonable reason' to start by contacting the adviser themself? 

If it was a directly authorised firm or an area of advice where an explanation/misunderstanding could be the issue, I would absolutely agree with you.

However, this is a high-risk, unregulated investment.  It is not suited to mainstream investors, and the vast majority of them get classed as missales.      This is not opinion. This is how the FCA treat them and therefore the FOS too.   Effectively, if you have a conventional 1-10 risk scale, these are off that scale.   

Also on 1st Nov 2007, the FCA introduced rules on the type of investor they can be promoted to.    These were certified high net investors, certified sophisticated investors, and self-certified sophisticated investors.   The OP says they were sold in 2008-2009 which is after this rule change

So, let me restate with some caveats.
a) if its less than 5% of the invested assets then its acceptable (assuming the others are mainstream).
b) if the OP requested that the investment be used rather than the adviser promote it.
c) if the losses are small, then despite it being unregulated, property hasn't had a good time and even regulated property investments have suffered. -  again this ties into how much of the portfolio was allocated to it.
d) If the op is a certified high net investor, certified sophisticated investor, or self-certified sophisticated investor and again, it was within sensible limits, then there is limited reason to complain.

And, as I said above, if the firm was a directly authorised IFA, you should speak to them first as it could be a quicker process to get resolution.  Directly authorised firms are directly responsible for their own stats and going straight to formal complaint can be damaging to them even when it is shown to be no wrongdoing.    They will usually take it personally, and it can cause mental health issues if the complaints are unfair.     Whereas network firms, the network member is not personally responsible and not allowed to intervene or resolve.  They have to leave it to the network.

And if this wasnt unregulated overseas property, I would say speak to them first but unregulated overseas property was a well known scam or missale area (in particular cape verde property) and it was known to be before this was sold.  Long term members may well remember the posts we used to get on this board back then.

Here are some FOS outcomes:
https://www.financial-ombudsman.org.uk/decision/DRN-4293091.pdf
https://www.financial-ombudsman.org.uk/decision/DRN-3596412.pdf
https://www.financial-ombudsman.org.uk/decision/DRN7704357.pdf

Marcon

@dunstonh - thank you very much for going into so much helpful detail.

Frodo1032

Thankyou you all for your advice.

Yes disappointed as I am with the funds I really didn't want to cause problems for my (I)FA unnecessarily. Whether he he put me in those funds at that time purely because they paid high commission knowing there were possibly scams I will never really know. I don't like having negative views of people.

Reading through those FOS Outcomes I seem to have been put through similar processes i.e transferring to SIPPx2, signing certified investor paperwork, but they are significantly larger sums they had invested and much closer to there retirement dates than me.

If my friend had not investigated then I would have just carried on with life as normal but now I am aware its something I would like to put behind me to my satisfaction. I don't think I have anything to lose. 

I will put in a complaint to Quilter and I assume based on what Dunstonh says my current FA will not be aware or contacted? I assume they will have my paperwork related to that time already.

There seems to be solicitors online that specialise in cases like these who might do the complaint on my behalf. Is it worth paying the fees going through a Solicitor or is this a very straight forward process?

dunstonh

Yes disappointed as I am with the funds I really didn't want to cause problems for my (I)FA unnecessarily. Whether he he put me in those funds at that time purely because they paid high commission knowing there were possibly scams I will never really know. I don't like having negative views of people.

They certainly paid high commission. Adviser firms were getting canvassed by property fund companies at that time and a key selling point were the high commissions.   Especially in the lead-up to the RDR, which banned commissions for regulated investments but did not for unregulated.    

The vast majority of advisers saw through this and didn't use them.   Data is hard to come by but the UK's largest IFA adviser network back in that period published data to support its reasons for dropping independent status said that under 1% of its member firms used unregulated investments.  So, if we assume that is reflected across the board, which is not unrealistic, then if 99% of firms didn't use them and 1% did, why did yours?  Was it for your benefit or was it for theirs?   Was it that they didn't really understand the risks and fell for the sales patter?   I had a meeting with one of those companies and the sales speak was strong.

I will put in a complaint to Quilter and I assume based on what Dunstonh says my current FA will not be aware or contacted? I assume they will have my paperwork related to that time already.

Quilter will tell your FA.   Quilter will ask them for a summary of the recommendation in addition to the client files that they hold.      That is inevitable, I am afraid, and if the complaint is upheld, the adviser will be liable for some of the cost (typically the excess on their PI insurance).   And it could sour the relationship.   Either you will end up wondering why the adviser put you in something that most advisers shunned and you will start to second guess them and/or the adviser will feel they cannot work with you any more as they have taken the complaint personally (probably less likely as they will know that their unregulated sales are a ticking bomb around their neck that could lead to complaint at any time).

There seems to be solicitors online that specialise in cases like these who might do the complaint on my behalf. Is it worth paying the fees going through a Solicitor or is this a very straight forward process?

Absolutely do not use one.   
a) most of these are not solicitors but unqualified legal firms that send as little as a spreadsheet or email asking the principal (Quilter) to investigate the sale.  
b) Sometimes, the claims company will send a template of allegations, whether truthful or made up.   If the adviser firm can show that many of the allegations are false, then where there is little or no data (which is often the case with old unregulated sales), then the balance of probability decisions tend to go with the side that is most credible.   All those false allegations work against you.
c) statistically, Claims companies have a lower success rate than personalised complaints. 
d) they offer nothing that you can do yourself.   You don't write war and peace.   You bullet point your concerns and keep it simple.  

Frodo1032

Absolutely do not use one.   

a) most of these are not solicitors but unqualified legal firms that send as little as a spreadsheet or email asking the principal (Quilter) to investigate the sale.  
b) Sometimes, the claims company will send a template of allegations, whether truthful or made up.   If the adviser firm can show that many of the allegations are false, then where there is little or no data (which is often the case with old unregulated sales), then the balance of probability decisions tend to go with the side that is most credible.   All those false allegations work against you.
c) statistically, Claims companies have a lower success rate than personalised complaints. 
d) they offer nothing that you can do yourself.   You don't write war and peace.   You bullet point your concerns and keep it simple.  

I had called one today who were familiar with my situation and with the companies mentioned and were cheaper than the rest who wanted 33%. But yes I can I understand they may well use a pre existing template to take pot shots at Quilter as that's easier than understanding my particular situation. 

But then if I do it myself a few badly worded sentences could be all it takes to refuse my complaint? And I'm going against a multi million pound company who will lawyer up ? Im sure they will have had enough complainants to know how to get around this. How can I compete against that ?

dunstonh

I had called one today who were familiar with my situation and with the companies mentioned and were cheaper than the rest who wanted 33%. But yes I can I understand they may well use a pre existing template to take pot shots at Quilter as that's easier than understanding my particular situation. 

33% plus VAT (so add on another 20%) to do something you can do in about 10-15 minutes.  You wrote it on here and didn't pay a CMC to do that.  So, you just do the same to Quilter.    It really is that simple.

But then if I do it myself a few badly worded sentences could be all it takes to refuse my complaint? 

Unless you plan to tell lies, there is nothing you can say that can result in the wrong outcome.

 And I'm going against a multi million pound company who will lawyer up ?

That is not how the complaints process works.   Only if you used the courts, would they employer lawyers.   The FCA regulated complaints process is lawyer free.

Im sure they will have had enough complainants to know how to get around this.

The FOS decisions suggest otherwise.

How can I compete against that ?

You seem to have an incorrect perception of how it works.   It's not adversarial like that.  And the CMCs don't have some alternative system.  They use the regulated complaints process and FOS and still end up with a lower complaints success rate.  Indeed, the FOS has become so disillusioned with claims companies wasting their time and resources that they are brining in new rules to combat them.

In a recent consultation paper the FOS said in 2022, CMCs and other professional representatives only obtain an outcome in favour of the complainant in 22% of their cases. This is lower compared with the average success rate of 32% when consumers brought their cases without representation.

I just did a FOS decisions search (which has very poor filters but its the best we have)
Under positive solutions and Mortimer there were four FOS decisions and all four upheld.  None rejected
Under quilter doing the same, none rejected and two upheld.