Avalon SIPP Mis-Selling – Who Was Involved?

SIPPs mis-selling is an escalating issue, with increasing numbers of people adversely affected. While SIPPs offer greater investment freedom than a traditional pension pot, they come with bigger financial risks – and sometimes, advisory firms and SIPP providers don’t outline the risks properly.

Multicorp Rose and Avalon SIPPs are prime examples of mis-selling in action. If you’ve been sold an Avalon pension product and it’s underperforming, you may have grounds to make a claim. Here’s more information.

What happened to Avalon?

Avalon provided SIPPs to clients, which were invested in places like HJ Commercial Plc, HJ Residential Plc, HJ SME Plc and Ukrainian Property Fund. The issue with this? These were high-risk investments, and when some of them failed, it left customers seriously out of pocket.

Avalon’s troubles first started back in 2016, when the company collapsed. This was due to a claim brought against it by Michael Bennett, who stated that the firm’s ex-managing director had taken fees for arranging investments in a consortium that didn’t actually exist. The resulting case cost Avalon £2 million, and left them in financial ruin.

The firm’s fortunes changed when they were bought out by Embark Group (who own Hornbuckle, another SIPP provider). Embark stated that Avalon’s team weren’t responsible for the collapse, and that they had faith that “the people running it were of significant quality”.

The Chief Executive for Embark, Phil Smith, claimed that the Avalon Freedom SIPP, which invested in Croatian property among other things, would continue to be offered to clients. They also avoided paying out for further claims against Avalon by only purchasing the assets of the firm, rather than its equity.

Avalon – a SIPPs provider destined to under-deliver?

Despite the bail-out from Embark, Avalon was eventually dissolved in 2018. This was due to rising complaints about its investment practices, particularly relating to pension products.

In 2019, the FSCS declared that several claims had been made against Avalon, relating specifically to the investments made under their clients’ pension plans. The firm was investigated in terms of its due diligence, and whether it acted responsibly with customers’ funds or not.

Just a few weeks later (in January 2020), the company was announced ‘in default’. This meant that ex-clients affected by Avalon SIPP’s high-risk, illiquid investments were able to seek compensation.

It’s important to note that if you’re one of Avalon’s previous customers, you could be in a strong position to seek compensation. To find out, get in touch with our team today via our contact page.

How were Multicorp Rose involved?

Multicorp Rose were an advisory firm (associated with Pensions Calculator), who recommended Avalon SIPPs to their clients as a viable pension option. Regrettably, Multicorp had hit the headlines in the past for their use of ‘pension introducer firms’ to obtain clients. Pension introducer firms are unauthorised agencies that typically cold-call people to encourage them to invest, and in the past, the FCA has had to investigate their activities.

Due to complaints made against them, Multicorp Rose have now also collapsed.

What happens now?

At this present time, Avalon SIPPs have already had well over 200 complaints, and the FSCS has paid out £264,000 in compensation. It seems likely that more claims will be made in the future.

If you were an Avalon customer (or were sold an Avalon SIPP by Multicorp Rose) you may have been mis-sold to. Ask yourself the following:

• When you were sold your SIPP, did the advisor assess your attitude to risk?
• Were you given a full range of SIPPs products to choose from?
• Did the advisor give you any indication of what areas your SIPP funds would be invested in?
• Was the product explained properly to you?
• Were all the fees and extra charges outlined?
• Did the advisor explain the key differences between a traditional pension and a SIPP?
• Do you feel that they recommended the right pension product, or that they acted without due knowledge of your unique circumstances?
• Were you pressurised to invest in an Avalon SIPP?
• Were you approached via a pension introducer firm? (Typically via ‘cold calling’)

If the product (and risks involved) weren’t explained properly, or if you were hassled into choosing a SIPP that you weren’t comfortable with, this counts as SIPP mis-selling.

What to do if you’ve been mis-sold to?

Goodwin Barrett are here to help you seek compensation for your financial losses. Over the years, we’ve won money back for hundreds of clients – if you’d like us to do the same for you, get in touch with us today on 0808 163 1659 or email enquiries@goodwinbarrett.co.uk.

 

References

https://financefeeds.com/uk-financial-services-compensation-scheme-completes-investigations-avalon/

https://citywire.co.uk/new-model-adviser/news/new-avalon-owner-backs-collapsed-platforms-management/a885287

https://www.ftadviser.com/pensions/2020/02/03/fscs-puts-collapsed-sipp-administrator-in-default/