Upheld: Pension transfer advice complaint against Quilter Financial Limited
Financial Ombudsman decision DRN-4316320 of 2023-11-29T00:00:00+00:00. Pension transfer advice complaint against Quilter Financial Limited. Outcome: Upheld.
Decision detail
| Reference | DRN-4316320 |
|---|---|
| Decision date | 2023-11-29T00:00:00+00:00 |
| Firm | Quilter Financial Limited |
| Product | Pension |
| Claim type | Pension transfer advice |
| Outcome | Upheld |
| Remedy | Quilter must calculate compensation by: (1) determining the current end date value of Mr V's SIPP portfolio (figure X), treating the illiquid Cayman Islands land as nil value unless Quilter purchases it at a commercial value; (2) calculating the notional value (figure Y) that the portfolio would have reached had it remained with the original two pension providers, using either actual notional values from those providers or benchmarks of 50% FTSE UK Private Investors Income Total Return Index and 50% average fixed rate bond returns; (3) if Y exceeds X, paying compensation equal to the difference plus 8% simple interest from end date to settlement; (4) paying compensation into the SIPP if possible (reduced by 15% to account for tax-free lump sum treatment) or directly to Mr V if not; (5) paying five years' worth of SIPP fees as a lump sum to cover costs of closing the SIPP; (6) paying £250 for distress and inconvenience. |
Summary
Mr V complained about Quilter's advice in 2012 to transfer his two occupational pension schemes into a SIPP to facilitate the purchase of a plot of land in the Cayman Islands. Quilter initially could not locate records of the advice but subsequently upheld the complaint in December 2022, acknowledging the investment was obviously unsuitable and high-risk and the land was undiversified, unregulated, and illiquid. The dispute centered on the valuation of the Cayman Islands land for compensation purposes: Quilter valued it at £27,500 (the original purchase price), while Mr V argued it should be valued at zero as an illiquid asset. The Ombudsman upheld Mr V's complaint and determined the land should be valued at zero, finding that Quilter's evidence of other properties being marketed at higher prices did not establish the actual value or marketability of Mr V's specific plot, particularly given the absence of any valuation since 2012 and lack of contact with the seller since 2013.
The Ombudsman's reasoning
The Ombudsman found that Quilter itself had acknowledged the pension transfer advice was unsuitable and the land investment was obviously unsuitable and high-risk. The Ombudsman rejected Quilter's argument that the land could be readily sold based on website listings of other properties, finding that an independent local valuation would be needed to establish actual value. The Ombudsman noted that Mr V's SIPP provider had attempted to obtain a valuation in 2020 without success, and there had been no contact with Firm A since 2013. Given Quilter's own admission that the investment was illiquid and unsuitable, and the lack of evidence of actual marketability or current value, the Ombudsman determined it was fair to treat the land as having zero value in compensation calculations. The Ombudsman rejected Quilter's argument that Mr V should have independently verified the investment's value, noting that he had received regulated advice and should have been able to rely on it.
How this compares
| Group | Decisions | Uphold rate |
|---|---|---|
| Quilter Financial Limited, all decisions | 31 | 68% |
| Pension transfer advice, all decisions | 7,542 | 54% |
| Pension, all decisions | 15,579 | 47% |
Source
Read the original decision on the Financial Ombudsman Service website