Upheld: Pension transfer advice complaint against Mattioli Woods Limited

Decision detail

Summary

Mr H, a US-based expat, was advised in 2010 by Mr C of Firm K to transfer his DB pension (£49,824) and three DC pensions (totalling £49,511) into a SIPP managed by MW to invest with Business M. MW accepted the SIPP application without conducting adequate due diligence on Mr C or Firm K, despite red flags including missing FSA authorisation details, Mr H's US residence, and Firm K's status as only an Introducing Appointed Representative. In 2023, Mr H's US tax adviser identified that the transfer was unsuitable and the SIPP had underperformed projections, potentially costing him over £200,000. Investigation revealed Mr C lacked the required Series 65 qualification at the time of the 2010 advice and was never authorised in the UK. The Ombudsman upheld the complaint, finding MW breached its regulatory obligations under the Principles for Businesses by failing to conduct sufficient due diligence and identify risks of consumer detriment, and should have rejected the application. MW must calculate and pay redress based on FCA guidance for unsuitable pension transfers, plus £300 for distress.

The Ombudsman's reasoning

MW failed to comply with its regulatory obligations under the Principles for Businesses (particularly Principles 2, 3, and 6) and good industry practice when accepting Mr H's SIPP application. Although MW was a non-advisory SIPP operator, it was required to conduct due diligence on introducing advisers and consider whether to accept business based on identified risks of consumer detriment. The missing FSA number and address for Firm K, combined with Mr H's US residence and the nature of the transaction (DB pension transfer), should have triggered MW to conduct basic research. Had MW checked the FSA Register, it would have discovered Mr C was not authorised in the UK and Firm K was only an IAR (which cannot provide advice). Had MW reviewed Firm K's website or contacted Firm K directly, it would have identified concerns about the regulatory regime and Mr C's qualifications. The 2009 Thematic Review Report explicitly stated SIPP operators should have procedures to identify consumer detriment such as unsuitable SIPPs. MW should have either obtained satisfactory information from Firm K or rejected the application. Had MW contacted Mr H to confirm the position, it would have learned he received advice to transfer his DB pension—a complex transaction that in 2010 was subject to the presumption of unsuitability under COBS 19.1.6G unless clearly demonstrated to be in the client's best interests. The evidence suggests Mr C lacked the required Series 65 qualification at the time of the advice, making the arrangement particularly concerning. MW's failure to conduct adequate due diligence caused Mr H to proceed with an unsuitable transfer that he would not have made had MW properly rejected his application.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website