Organic Investment Management’s Mis-Sold SIPPs– Who Was Involved?

Mis-sold SIPPs are a growing problem, with some SIPPs products being unsuitable for consumers’ needs.

The Organic Bond Fund A, and The Organic Long (and Short) Alpha are prime examples of problematic pension products. Here’s more information about the SIPP provider, Organic Investment Management, and the action that was taken against them.

When did the problem start?

The FCA first issued Organic Investment Management with several warnings over their pension products back in 2016. The complaints levelled against them were that there weren’t enough measures in place to protect their clients’ investments. High-risk products were listed as a specific concern.

In June 2017, the FCA followed up on these warnings, noting that the firm had failed to address the previously highlighted issues. Organic Investment Management agreed not to take in new money at this point.

Unfortunately, although the firm declared it would reduce client exposure to high-risk investment, it transpired that they’d done the exact opposite. As such, in 2018, complaints against Organic increased dramatically.

In December 2019, the FCA issued a request to the firm, stating that it needed to cease carrying out any regulated activities. Unsurprisingly, the company then went into administration.

What were the complaints?

The FSCS has received 80 claims in relation to Organic Investment Management. These claims related to a variety of their products and services; including SIPPs, pension-switching, the advice offered, and portfolio activities.

The principle complaint was in relation to money lost through high-risk investments; with many clients claiming they weren’t given adequate information about the level of risk involved. Many advisory firms were also dragged into the situation, due to offering poor advice to customers regarding Organic’s pension products.

If you received bad advice when switching pensions, get in touch with Goodwin Barrett’s team today via our contact form.

Which advisory companies were involved?

A few advisory firms were named, including NJ Associates, who have now also gone into liquidation. The FSCS has had to pay out at least £28,000 in claims associated with this financial advisor alone.

Another significant company to be highlighted in the media was Economic Financial Solutions IFA Ltd (who previously traded as Torch Wealth Management). They recommended Organic’s SIPPs products to several clients, without properly explaining the risks involved.

What happened with Economic Financial Solutions IFA?

In August 2019, the Financial Ombudsman Service declared that Economic Financial Solutions must compensate clients for poor advice given in relation to SIPPs investment. In relations to just one specific case, FOS said there was no apparent reason for the client to switch their pension to the Organic SIPP, as their existing pension product was achieving good growth, and the SIPP offered no real financial advantage.

The client in question stated that he was advised to transfer his pension funds to a SIPP, as he’d benefit from greater flexibility. Economic Financial Solutions (then trading as Torch Wealth Management) informed the customer that the SIPP was more affordable, and offered a better choice of investments. The client invested over £70,000, which was mostly placed in ‘penny shares’. This resulted in him losing a significant portion of his money.

What will happen next?

Organic Investment Management have now collapsed, after failing with the FSCS in March 2020. As a result, they are no longer trading.  They were declared ‘in default’, which means they may owe a civil liability to their clients, and may be sued in court over their past actions.

This is promising news for ex-customers of the firm, as it means that they should be able to claim compensation for their mis-sold SIPPs investments. At present, the FSCS hasn’t announced how these claims will be dealt with, but the likelihood is that those who invested with Organic will be in a strong position to claim money back against their losses.

What to do if you’ve been mis-sold a SIPP

If you’re one of the many people who invested in The Organic Bond Fund A, or The Organic Long / Short Alpha SIPPs, and you’ve lost money as a result, it’s important to review how the pension was sold to you.

Ask yourself the following:

• Did your advisory firm (e.g. Torch Wealth Management / Economic Financial Solutions IFA) explain the SIPP properly?
• Were the risks made clear to you?
• Were you offered a range of SIPPs products?
• Did you feel coerced into choosing The Organic Bond Fund A, or The Organic Long / Short Alpha SIPPs, or indeed any pension product?

If you’re concerned that you’ve been a victim of SIPP mis-selling, get in contact with the Goodwin Barrett team. We’ve worked with hundreds of clients, getting them the compensation that they deserve. To find out more, give us a call today on 0808 163 1659 or emailenquiries@goodwinbarrett.co.uk.

References

https://citywire.co.uk/new-model-adviser/news/high-risk-investment-fears-prompt-fca-to-act-against-dfm/a1199698

https://www.ftadviser.com/pensions/2019/09/27/adviser-to-pay-out-over-unsuitable-sipp-transfer/

https://financefeeds.com/claims-organic-investment-management-passed-fscss-processing-team-nov/

https://www.ftadviser.com/regulation/2020/03/24/fscs-receives-80-claims-against-failed-dfm/