Much of the November 2018 edition of the Financial Ombudsman Service (FOS) newsletter focuses on pension complaints.
Chief ombudsman Caroline Wayman introduces this issue of Ombudsman News by acknowledging that pension-related complaints account for less than 2% of her organisation’s workload, however she also commented that a significant proportion of the complaints made against financial advisers concern pension advice and other issues related to retirement saving.
Also in the newsletter, Keith Richards, chief executive of trade association the Personal Finance Society, warns financial advisers that now consumers have more freedom as to how they access their pension pots, advisers now have additional responsibilities to guide clients through the various options and to give appropriate advice. Mr Richards also says that advisers have an important role in advising clients on whether to transfer from one form of pension arrangement to another, or on whether it might instead be best to leave their retirement savings in the same pension vehicle.
The newsletter includes a number of case studies, all of which relate to complaints the FOS has received about transfers from defined benefit (final salary) to defined contribution pension arrangements. These cases include:
- An adviser did not recommend a transfer, but this upset the client who said she had been led to believe by her adviser that the transfer would proceed – she wished to withdraw the entire transfer value to start a new business. The FOS ruled that the adviser should have been clearer from the outset about how far they’d be willing to help with her pension, and the adviser was ordered by the FOS to pay a ‘moderate’ amount of compensation
- An adviser took a long time to give a client a decision on a potential transfer. As the original transfer value was only valid for 90 days, when the client applied for a second transfer value, it was around £50,000 lower. The adviser was instructed by FOS to pay the client the difference between the two transfer values, plus an additional sum for the inconvenience caused
- An adviser took five months to complete a pension transfer process, and in the words of the client “I did half the work on my transfer”. The FOS instructed the adviser to put the client back in the position he would have been in if the transfer had been completed by his 55th birthday, considering both the lost investment returns for the period between his birthday and the transfer date, and a 50% refund of their fees. Additional compensation was also paid for the inconvenience caused
- An adviser recommended a transfer from an occupational pension to a personal pension. Later the client discovered that the shortfall in the fund had since been put right by the administrator, and that additional payments had been made to clear the previous deficit. The FOS noted that she had been recommended to transfer out of an occupational pension that offered a guaranteed monthly payment, and that redress should be paid to her for the losses she may have suffered by receiving inappropriate advice
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