A Claims Management Company
Total amount invested
£650 million as of August 2016.
Why did people invest in it?
Clients were informed of the potential benefits of SIPPs over a traditional pension.
Why was it mis-selling?
Brooklands failed to conduct appropriate due diligence into companies who referred clients to them.
Potential value of cases
An average of £118,181 per person (£650 million divided by a reported 5,500 customers).
Brooklands Trustees Ltd was a SIPP and pensions provider which was founded in March 2006. They offered a range of self-invested pensions options, emphasising the flexibility, innovation and proficiency of their services. Brooklands had a number of subsidiary companies, including a branch in Guernsey, and a branch in New Zealand. They aimed to differ from their competition by only working through introducers instead of interacting directly with their clients. Unlike some providers, they also did not charge an exit or transfer fee, as they claimed to believe these were placing unfair barriers should a client ever wish to leave.
In March 2013, an Australian property fund called LM Managed Performance Fund collapsed. It transpired that a number of Brooklands SIPPs contained investments in this investment. The Financial Ombudsman Service began to receive a number of cases related to Brooklands, culminating in the arrival of approximately 20 cases at the FOS by July 2016.
When formal investigations began into one of these cases, it was noticed that one of the companies referring clients to Brooklands had no authorisation to do so when they originally referred their client. This firm, FCP Insurance Consultants, was based in Cyprus, and was not then authorised to provide financial advice on pensions or other financial services. Brooklands first began an introducer agreement with FCP in 2009. They did not detect that FCP were not authorised to conduct this form of business until 2012.
While Brooklands then originally rejected the client referral in late 2012 due to this lack of appropriate FCA authorisation, FCP then took steps to secure a relationship with a regulated company in the UK to allow the referral to go through. This is sometimes called a piggyback agreement. Ultimately, the referral succeeded, and the individual in question was allowed to create a SIPP containing a sizeable LM Managed Performance Fund investment.
In August 2015, the FOS ruled that Brooklands had failed to conduct appropriate due diligence into FCP. They stated that had Brooklands conducted the appropriate level of checks into FCP, they would have rejected the pension transfer entirely on the basis that it was not in the best interests of the customer. As such, the FOS ordered that Brooklands should give the customer the maximum sum of £150,000 in compensation. Combined with a number of other cases, by July 2016, Brooklands was facing a total bill of £1.6 million related to mis-selling cases. It was declared insolvent, and was formally wound up in October 2018.
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