Upheld: Pension transfer advice complaint against Quilter Financial Limited
Financial Ombudsman decision DRN-5697790 of 2025-11-25T00:00:00+00:00. Pension transfer advice complaint against Quilter Financial Limited. Outcome: Upheld.
Decision detail
| Reference | DRN-5697790 |
|---|---|
| Decision date | 2025-11-25T00:00:00+00:00 |
| Firm | Quilter Financial Limited |
| Product | Pension |
| Claim type | Pension transfer advice |
| Outcome | Upheld |
| Remedy | Quilter must: (1) undertake redress calculation per FCA PS22/13 and DISP App 4 to put Mrs H in position she would be if she had remained in DB scheme A, calculated to normal retirement age 65; (2) offer redress as cash lump sum with option to augment into defined contribution pension; (3) apply notional 20% income tax deduction to future income benefits only; (4) refund all OACs deducted from ISA since April 2023; (5) pay return on refunded ISA fees calculated per actual ISA performance or using benchmark of 50% FTSE UK Private Investors Income Total Return Index and 50% average fixed rate bond return. |
Summary
Mrs H complained about unsuitable pension transfer advice received from Quilter in March 2015, whereby she was advised to transfer her DB scheme A (CETV £58,130) to a SIPP. Although Mrs H's risk profile questionnaire indicated low risk (level 2), Quilter adjusted this to low-medium (level 4) to support the transfer recommendation. The critical yield of 4.5% required to match DB benefits was likely understated due to errors in GMP escalation assumptions and compared unfavorably to the FOS discount rate of 4.4%. Mrs H also complained that she did not receive annual reviews for her SIPP and ISA despite paying ongoing advice charges. The Ombudsman upheld both complaints, finding the transfer advice unsuitable and ordering compensation per FCA methodology PS22/13, plus refund of ISA fees from April 2023 with investment returns.
The Ombudsman's reasoning
The Ombudsman found the advice unsuitable because: (1) Mrs H's actual attitude to risk was low (risk level 2) but was artificially adjusted to low-medium (risk level 4) to support the transfer; (2) the critical yield of 4.5% was likely understated due to errors in GMP escalation assumptions, making it unachievable; (3) even accepting the 4.5% figure, this barely matched the FOS discount rate of 4.4%, meaning Mrs H was unlikely to achieve equivalent benefits; (4) no persuasive reasons existed to prioritize death benefits over retirement income security; (5) Mrs H's other substantial assets meant she did not need to take pension risk; and (6) the FCA's starting assumption is that DB transfers are unsuitable unless clearly in the client's best interests, which was not demonstrated here.
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