The Pensions Ombudsman has rejected a complaint by a SSAS member that the scheme administrator failed to ensure that the member took proper advice and understood the risks of the arrangement he was entering into (Mr L PO-16688).


Following a meeting with an unregulated pension introducer, Mr L was persuaded to transfer his pension rights to a newly established SSAS, of which he would be a trustee and the sole member.  Mr L entered into an agreement with Bespoke Pension Services Ltd for Bespoke to provide administration services to the SSAS.  These included ensuring that the trustee obtained "proper advice" as required by section 36 of the Pensions Act 1995.

In his capacity as trustee, Mr L subsequently received an undated report from Broadwood Assets Ltd, an unregulated business specialising in advice in relation to SSAS investments.  Broadwood provided advice on investing in a yet to be built hotel development in Cape Verde provided through The Resort Group PLC.  The report discussed the investment and listed the typical risks associated with such unregulated property investments.  It described the investment as suitable for adventurous investors with an otherwise diverse portfolio.

Mr L agreed to invest just over £70,000 in the investment.  He signed an agreement which involved the SSAS purchasing membership of a company limited by guarantee which would in turn purchase the hotel in Cape Verde.  Mr L subsequently attempted to obtain return of the funds under the agreement, but without success.  He then made a complaint to the Ombudsman about Bespoke, alleging that it had failed to ensure he received independent advice or that he understood the risks of the arrangement that he entered into.

The Ombudsman expressed sympathy for Mr L, but rejected his complaint.  Neither the scheme's trust deed nor the agreement entered into between Mr L and Bespoke required Bespoke to provide investment advice or comment on the suitability of the investment.  Bespoke was required to use all reasonable endeavours to ensure Mr L obtained "proper advice" within the meaning of the relevant legislation.  The nature of the investment, a company limited by guarantee, meant that Mr L was not purchasing shares and there was no requirement for the advice to be regulated in order to constitute proper advice.  For the advice to be "proper advice" the trustees were required to reasonably believe the adviser to have appropriate knowledge and experience of the management of the investments of trust schemes.  This appeared to be the case in relation to Broadwood, the company providing the advice.  However, the Ombudsman did note that Broadwood had been linked to a number of other similar complaints against other SSAS providers.  He suggested Bespoke should be wary of similar unregulated parties in the future.

Mr L complained that he had not been given the opportunity to consider Broadwood's report.  However, the Ombudsman said it would have been responsible for Mr L as the scheme's trustee and the beneficiary of the investment to have demanded the opportunity to do so.  

Our thoughts

This Pensions Ombudsman determination in relation to the duties owed by a SSAS administrator contrasts starkly with a decision by the Financial Ombudsman Service (FOS) (DRN-3042933) (covered in this e-bulletin) in which FOS ordered a SIPP provider to compensate a SIPP member who had invested his pension fund in The Resort Group.  FOS based its decision on the FCA's Principles and held that the SIPP provider should have identified that the volume of high risk business being introduced by a single small IFA firm should have called into question whether members were being properly advised.  The Pensions Ombudsman determination itself alludes to the more stringent regulatory regime to which SIPPs are subject, and suggests that a SSAS was used in order to avoid that more stringent regulatory regime.

Key contact

Jade Murray

Jade Murray

Partner, Pensions
United Kingdom

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