Upheld: Pension transfer advice complaint against Mattioli Woods Limited
Financial Ombudsman decision DRN-5735733 of 2025-08-06T00:00:00+00:00. Pension transfer advice complaint against Mattioli Woods Limited. Outcome: Upheld.
Decision detail
| Reference | DRN-5735733 |
|---|---|
| Decision date | 2025-08-06T00:00:00+00:00 |
| Firm | Mattioli Woods Limited |
| Product | Pension |
| Claim type | Pension transfer advice |
| Outcome | Upheld |
| Remedy | MWL must calculate and pay compensation to Mr C by comparing the actual value of the SIPP at the end date (when it was converted to an annuity in 2018) against a fair value calculated using the FTSE UK Private Investors Income Total Return index (or FTSE WMA Stock Market Income total return index prior to 1 March 2017) as the benchmark. The benchmark period runs from the date of the pension transfers to the date the SIPP ceased to be held. If the fair value exceeds the actual value, the difference is compensation payable. Compensation should be paid into Mr C's pension plan with 8% simple interest per year on any loss from the end date to settlement. If payment into the pension plan is not possible, compensation should be paid directly to Mr C with a notional tax adjustment based on his marginal tax rate at retirement age (applied to 75% of compensation to account for potential tax-free lump sum). |
Summary
Mr C complained that MWL gave unsuitable advice in 2012 to transfer his personal and occupational pensions (totalling approximately £72,400) into a SIPP. Mr C was recently made redundant, six years from retirement, and sought pension growth. MWL recommended the transfer citing benefits including increased visibility, diversity, portfolio balancing, and improved performance prospects, but the transfer increased annual costs by 2%. The ombudsman upheld the complaint, finding that MWL failed to provide a clear plan for achieving the required outperformance to justify the additional costs, contrary to regulatory guidance. The recommendation was unsuitable because Mr C's actual objective was pension growth (not access to the PAM service), he had limited time to retirement and modest pension values, and his existing arrangements could have been rebalanced through fund switches without incurring additional costs. MWL was ordered to pay compensation calculated by comparing the actual SIPP value against a fair value benchmark using the FTSE UK Private Investors Income Total Return index from the transfer date to 2018 when the SIPP was converted to an annuity.
The Ombudsman's reasoning
The ombudsman found that MWL's recommendation was unsuitable because: (1) it was based on improved performance prospects without providing a clear, competent plan for how the SIPP/PAM service would achieve the required annual outperformance needed to offset the 2% additional costs; (2) Mr C's actual objective was pension growth, not access to the PAM service, which was part of the recommended solution rather than his goal; (3) the increased costs were certain while outperformance was not guaranteed, making it probable that Mr C could be worse off by retirement; (4) Mr C had only six years to retirement and modest pension values, leaving no luxury of a long-term recovery period; (5) the existing pensions could have been rebalanced through fund switches if necessary, without incurring additional costs; (6) most components of the PAM service were surplus to Mr C's requirements; and (7) MWL failed to comply with regulatory guidance requiring firms to demonstrate why improved performance was more likely in the new investment.
How this compares
| Group | Decisions | Uphold rate |
|---|---|---|
| Mattioli Woods Limited, all decisions | 10 | 40% |
| 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