Around 75 retirement savers who have lost money in a dodgy Brazilian green rain forest investment have been told to try and claim compensation from their financial advisers.
All the investors have a stake in Para Sky Plantation marketed by Global Forestry Investments (GFI).
The Serious Fraud Office is scrutinising the scheme after several complaints.
The trustee managing the scheme has written to the retirement savers urging them to act against their IFAs.
A handful of complaints have already been upheld against adviser Total Wealth Solutions.
In the latest, a retirement saver transferred £54,160 into Para Sky Plantation in June 2012.
Fraud investigation
Later, when reviewing his finances after divorce, the retirement saver found his money was not invested. The trustees told him the scheme was a fraud and he should contact the police.
The Financial Ombudsman declined investigating the Para Sky Plantation scheme as the investment was not regulated in the UK, but did suggest he could complain about TWS for the firm’s part in the transfer.
TWS tried to avoid taking responsibility by arguing the correct complaint procedure was not followed and that no advice was given to the client.
Ombudsman Roy Milne said TWS must follow pension transfer regulations.
“When giving its advice, TWS had to gather enough information to show that it knew its client and had to give suitable advice,” he said.
Order to pay compensation
“I don’t think TWS can avoid these obligations by limiting its role to only advising on the transfer.
“TWS was required to give suitable advice. It is difficult to see how it could have given suitable advice without considering the investment to be made. Clearly the success of the transfer depended on the performance of the new investment.
“If TWS had given suitable advice, the complainant would not have suffered the loss. I accept that other businesses were involved in the transfer. I think that TWS gave unsuitable advice that has caused him to suffer a loss.”
TWS was ordered to pay a commercial value to the saver for his loss plus £500 for distress.
The new Para Sky Planation trustee has downgraded the value of the investments to just £1.
