Not upheld: Pension transfer advice complaint against Pension Works Limited

Decision detail

Summary

Mrs R sought advice from Pension Works on transferring her occupational DB pension worth approximately £237,000 to access benefits flexibly and provide an inheritance. After an initial unclear advice outcome, Pension Works provided a transfer recommendation on 6 September 2022 but withdrew it the same day due to external compliance concerns. A final recommendation to retain the DB scheme was issued on 30 September 2022. Mrs R complained about the unsuitability of the retain advice and poor service standards, particularly the withdrawn transfer recommendation and delays in the process. The ombudsman found the retain advice was reasonable because the transfer value was insufficient to provide comparable retirement income and Mrs R's objectives could be met either way, and that the waiving of the £3,237 advice fee was appropriate redress for the distress caused.

The Ombudsman's reasoning

The ombudsman applied the strict regulatory standard for DB pension transfers, noting that the FCA's starting assumption is that transfers are unsuitable and that the bar for establishing suitability is high because lifelong guarantees are lost. Both suitability reports demonstrated that the transfer value was insufficient to buy comparable income on the open market (approximately £78,000 less than required). The cash flow modelling in both reports indicated Mrs R could meet her objectives with or without a transfer. While Mrs R had valid reasons for wanting to transfer (flexible access, inheritance planning), the adviser's role was to ensure suitable advice rather than simply allowing the customer to do what they wanted. The ombudsman found no material concerns with the cash flow modelling and concluded that since Mrs R's objectives could be met by either retaining or transferring, Pension Works could not prove a transfer was in her best interests. Regarding the process delays, the ombudsman found these were not responsible for the first transfer value expiring and that even if advice had been provided sooner, Mrs R could not have transferred on an insistent customer basis without engaging a new adviser. The waiving of the £3,237 fee was considered reasonable redress for the distress caused by the withdrawn transfer recommendation and the mismanagement of expectations.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website