Not upheld: Pension transfer advice complaint against Profile Financial Solutions Limited

Decision detail

Summary

Miss B complained that Profile Financial Solutions gave unsuitable advice in 2017 to transfer her pension from an Appropriate Personal Pension into a new personal pension, resulting in losses. Miss B was 46 years old with modest income (£10,000-£40,000), single with children, and limited financial capacity for loss. The ombudsman examined whether the switch offered reasonable potential for Miss B to be better off, considering cost differences (0.145% savings), similar risk profiles, and past performance data suggesting initial charges could be recovered within 6-7 months. The ombudsman upheld the suitability of the advice despite Miss B's subsequent fund losses, distinguishing between unsuitable advice and poor investment outcomes, and found no breach of FCA transfer requirements.

The Ombudsman's reasoning

The ombudsman applied FCA guidance on pension transfer suitability, requiring reasonable potential for the consumer to be better off to justify a switch. The analysis focused on: (1) cost comparison showing modest savings of 0.145% ongoing; (2) similar attitude to risk in both schemes; (3) past performance of new fund suggesting ability to recoup initial charges within 6-7 months; (4) no special benefits lost in old scheme; (5) Miss B's 20-year investment horizon providing time to recover costs. The ombudsman distinguished between unsuitable advice and poor investment outcomes, noting that subsequent underperformance does not retroactively make suitable advice unsuitable. The reasons cited for switching (drawdown flexibility, wider fund range) were not material given her circumstances, but the cost savings and investment performance potential provided sufficient justification.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website