Guinness Mahon is another SIPP provider who have had claims against them upheld by the Financial Ombudsman Service, for accepting business from unregulated introducer firm Avacade in respect of Ethical Forestry.
Ethical Forestry was an investment in plantations in Costa Rica which subsequently became part of a Serious Fraud Office investigation. Around 3,500 UK investors placed £70m of their money into this unregulated scheme, through SIPPs administered by companies such as Guinness Mahon.
Avacade were also pursued by the Financial Conduct Authority (FCA) for giving advice without authorisation. It is this unregulated advice that landed a lot of people into an unsuitable investment which unfortunately cost them their pension pots.
Guinness Mahon were found to have failed in applying adequate due diligence to Avacade and should have refused the business.
Other investments linked to the Guinness Mahon SIPP are the AIGO funds – a collection of high-risk investments that were not regulated by the FCA. Being unregulated means there’s no protection for the investor should things go wrong.
AIGO –Alternative Investment Growth Opportunities was a ‘loan note’ property investment scheme in which investors were promised high returns through annual coupons paid as cash back into investors SIPPS.
AIGO Funds became insolvent as a result of Guinness Mahon issuing a petition to wind up their business after they failed to issue the returns (coupons) to investors and fulfil their redemption obligations.
These types of investments are very high-risk and as such are only suitable for certain types of investors – mainly those who understand them and can afford the potential losses. Unfortunately, many investors have been exposed to high-risk, non standard investments through their SIPPs, despite them being unsuitable. Sometimes as a result of regulated financial advice.
The FCA announced in 17 Feb 2020 that Guinness Mahon Trust Corporation Ltd had gone into administration and that the appointed administrators – Smith & Williamson LLP – had immediately sold the SIPP part of the business to Hartley Pensions.
The announcement also said that Guinness Mahon had received complaints regarding historic high-risk investment and the due diligence carried out before accepting these investments into client SIPPs. It’s in light of the liabilities associated with these and potential complaints, that they had sought professional advice which advised to enter into administration
Guinness Mahon joined the FSCS list of failed firms on October 29th 2020.
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