A pensioner that ‘gambled’ over £200,000 of his pensions savings away has lost his complaint with the Financial Ombudsman Service (FOS) that a well known Self Invested Personal Pension (SIPP) provider failed in its duty to protect a vulnerable client.
The complainant does have a gambling addition but has this under control and was no longer gambling until he transferred his pensions to the SIPP and started ‘gambling’ with his pension fund by investing in geared investments. By gearing, we mean things like options and futures where e.g. You invest a 10% “deposit” for £100 stock market exposure and if that stock just grows say by 2%, that £2 in £100 but you only invested £10 (the 10% deposit on £100), so have made £2 for a £10 investment, that’s 20% over night.
The gearing offers huge potential returns but equally huge potential for losses.
In the above case, the pensioner gambled his pension down from over £200,000 to just £3,000 in a couple of years, lost his home and ended up ‘sofa surfing’.
The complainant suggested that the SIPP provider had failed in its duty to protect vulnerable clients and should have issued automatic warnings about the high-risk nature of the investments that the complainant had self selected.
The FOS ruled against the complainant suggesting that enough warnings were given, the SIPP provider was not negligent and that there are enough risk warnings for higher risk investments.
All financial firms (including us) have vulnerable client procedures and we never let any client have a pension or investment that is too complex for them.
SIPPs are self invested pensions. You self select your investments (unless you have an adviser to help you) and that is the purpose of a SIPP ig you want to choose and control your own investments. All regulated products and funds carry risk warnings or ratings and if you self select then you will have seen and must have accepted those risk warnings.
Yet again, someone blames someone else for their own actions and failings. Narcissists always blame others for their own actions or failures and there are sadly too many people that blame financial firms when it is their own failure to take action or refrain from action that is the cause for loss.
If a financial firm is negligent there is a structure for complaints and putting things right but sadly there are those few that try to abuse the system.