What were the complaints made against Cumulus Investment Management Ltd?
Here are the reasons why the financial advisers were shut down.
- Clients were introduced initially by an unregulated introducer through ‘cold calling’ – not the most legal or above board start to an investment scheme. The introducer likely used a variety of ‘hard sales tactics’ to coerce potential investors. Because the introducer was unregulated, they were able to operate under and away from both FOS and FSCS inspection.
- The firm claimed to advise on an ‘execution-only’ basis, meaning that the firm executed an instruction from the client without question. Most importantly, without any advice or guidance whatsoever.
- In all cases, the investment was considered to be too risky for the client – of course, it being ‘execution-only’ meant that the client would have received no kind of reassurance or risk management advice.
- The FOS raised serious concerns over the decision to invest in the Cumulus Ukrainian Property Fund, as two of the directors of the fund were also directors of the advice firm, which led to a severe conflict of interest.
This last complaint had a huge influence on the decision to penalise and dissolve Cumulus Investment Management. It was clear that the firm stood to personally profit from the contributions of investors, and the fact that the negotiations were ‘execution-only’ worked directly in their favour. Investing in Ukranian property was an extremely high-risk enterprise, and this style of negotiation allowed the firm to shirk all responsibility.
The ombudsman noted that the fund’s prospectus explained how the property fund was founded with 100 ordinary shares owned evenly between two individuals (both of whom founded Cumulus Investment Management).
“The fund prospectus explains how the charges and fees would be paid. Clearly, the directors stood to gain by increasing the value of the fund,” the ombudsman said.
What kinds of compensation could you receive?
In one case where Cumulus Investment Management was ordered to pay compensation to a wronged investor, the firm ended up paying over £24,000 and even took ownership of the investor’s newly acquired SIPP and the charges associated with it.
As the firm is now in default with the FSCS, complaints will now fall under their remit to investigate.
How we can help with Cumulus Investment Management Ltd compensation
Our team is well-versed in compensation negotiations and may be able to help with your claim. To get the ball rolling, complete the enquiry form on the right of this page. You can also speak to us directly by calling 0161 968 0768.
In the meantime, take a look at our blog. We have information on spotting the signs you have been mis-sold a SIPP, as well as a guide to learning financial terminology.