The Ombudsman found the advisory firm had not acted in their client’s interests when they advised him to invest £100,000 in the Queen Street Property Trust in 2007.
The investment delayed the client, known only as Mr H, from using his pension pot to retire as he had planned, the FOS found.
Mr H had been advised by Legacy on his pension since 1998 and had approached them in order to discuss transferring his section 32 plan to a personal pension (PPP).
He first complained about the Queen Street investment’s poor performance in 2013, labelling it “pretty disastrous” given he had transferred his pension on their advice in order to be able to retire early at 55.
In the FOS decision, it said investing in the Queen Street trust carried many associated risks as it was a building housing a number of tenants, and had been bought with a bank loan.
Not only was there no guarantee the investment could be sold in order for Mr H to begin drawing on his pension when he wanted there was a risk “of losing the whole amount invested”, the FOS said.
Despite Mr H having a job in the finance industry and signing an agreement the investment was execution only, the FOS concluded Legacy had advised Mr H on the investment, and had promoted the Queen Street trust to him.
The fact that Legacy had, under its former brand ‘Higgins’, been advisers to the Queen Street property unit trust scheme and received an annual commission payment of 0.5% of the NAV, was not disclosed to Mr H.
Legacy rejected an official complaint filed by Mr H in July 2015, two years after his original letter explaining his disappointment with the advice.
The firm said Mr H’s complaint was “out of time” and that he said he did not want the 2013 letter to be dealt with as complaint.
It also said Mr H was not given advice on the investment, that they believed it was never his intention to retire aged 55 and he was provided with all the facts and understood the risks of the investment in Queen Street.
However, the FOS upheld Mr H’s complaint, saying the 2013 letter fulfilled the definition of a complaint.
It said: “I don’t think the investment was in his best interests.
“He made it clear that he intended to retire at age 55.
“The section 32 plan was a large part of his pension provision. If he didn’t have access to those funds he wouldn’t be able to meet his goal to retire at 55.”
