Not upheld: Pension transfer advice complaint against EBS Pensions Limited

Decision detail

Summary

Miss N transferred her SIPP with Embark to The Focusplay Retirement Benefit Scheme in May 2015 after being referred by unregulated firms MPI and LMN, who advised her the transfer would improve her retirement benefits. Embark raised compliance concerns and on 30 March 2015 explicitly warned Miss N that it believed she was being scammed, enclosing Scorpion warning materials. Despite this clear warning and the Scorpion guidance advising to check adviser FCA registration, Miss N proceeded with the transfer after being reassured by the unregulated adviser. The scheme was subsequently found to involve fraud, with a trustee director imprisoned and Miss N's pension fund losing substantial value. The ombudsman found that while Embark had some due diligence failings under the PSIG Code, these did not cause Miss N's losses because she had already demonstrated she would ignore warnings and follow unregulated advice, so further due diligence would not have changed the outcome.

The Ombudsman's reasoning

The ombudsman found that while Embark had some due diligence failings (not asking all questions suggested by the PSIG Code, not directly contacting HMRC, not checking LMN's regulatory status), these failings did not cause Miss N's losses. Embark provided an exceptionally clear warning on 30 March 2015 stating it believed Miss N was being scammed, enclosed the Scorpion materials which specifically warned about checking adviser FCA registration, and Miss N confirmed she had read these materials. Despite this stark warning and the Scorpion guidance, Miss N chose to proceed after being reassured by the unregulated adviser LMN. The ombudsman concluded that even if Embark had conducted more thorough due diligence and discovered LMN was unregulated, Miss N had already demonstrated she would ignore warnings and follow the advice of the unregulated firm. Therefore, further warnings would not have changed the outcome.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website