James Hay pays Tory spending guru £19K after bungle

James Hay and Fidelity have been ordered to pay Sir Peter Gershon more than £26,000 in total in compensation after they delayed his investment by several months due to a lost cheque.

Gershon, pictured, was a member of the Conservative Public Sector Productivity Advisory Board, which wrote the plan to cut £12bn from public services. He is also a non-executive director of the Treasury.

In March 2007, Gershon instructed his financial adviser, Regency Investment Services, to invest £776,400 in the cash account of his James Hay SIPP into various funds held on the Fidelity Fundsnetwork platform.

James Hay transferred £776,400 from the SIPP's cash account into a pooled account, before sending a cheque for the same amount to Fidelity.

However, Fidelity claimed it has no record of the cheque ever arriving.

Two months of confusion between James Hay and Fidelity followed, until James Hay discovered the cheque had never been banked.

In May, James Hay sent another cheque. Fidelity received this the following day and placed Gershon's investments.

However, Gershon complained the delay had meant he had missed several investment opportunities.

The Deputy Pensions Ombudsman, Jane Irvine, ruled that James Hay, as the trustee of Gershon's pension, had a responsibility to ensure his investment had been processed in a reasonable amount of time.

Irvine also found Fidelity had failed to check during several phone calls with James Hay which investment was being discussed, as this was confused with another request from Gershon, which meant the missing cheque went unnoticed for so long.

Irvine said Gershon should be compensated with £26,853.78 into his SIPP.

She ordered the two providers to split the cost with James Hay paying75% and Fidelity the remaining 25%

Tim Sargisson, managing director of James Hay, said: "The findings by the ombudsman in this case relate to events that happened well before James Hay was acquired from Santander by the SIPP specialist IFG Group.

"On acquisition, IFG undertook a complete review of all administration and put in place robust procedures and systems to ensure that administrative errors of this nature do not occur.

"The James Hay offering is far removed from the days before regulation, at a time when the firm was owned by Santander."