Not upheld: Pension transfer advice complaint against HARBOUR ROCK CAPITAL LIMITED

Decision detail

Summary

Mr F, aged 60 and employed, sought advice from HRC in February 2020 regarding his two stakeholder pensions totalling £67,131. He wanted to access tax-free cash (£7,000) to reduce his mortgage and fund home improvements, and to consolidate his pensions. HRC recommended transferring both pensions to a SIPP with a higher-risk portfolio (67% equities). The transfer proceeded in July 2020. Over four years later, Mr F complained that the advice was unsuitable, arguing that alternatives were not properly explored, charges were higher, and the recommended investments were too risky. The ombudsman found the advice was not unsuitable, concluding that the transfer was a reasonable means to achieve Mr F's objectives, the recommended portfolio matched his moderately adventurous attitude to risk and his capacity to take risk given other guaranteed pension benefits, and alternative means to raise the funds were not viable given Mr F's preferences.

The Ombudsman's reasoning

The ombudsman applied the FCA's 2009 pension switching checklist as the starting point. On charges, while the SIPP's base AMC of 0.57% was lower than the existing 1%, the 1% ongoing adviser fee made overall charges higher. However, the ombudsman found this could be justified given Mr F's modest fund, moderately adventurous attitude to risk, and the seven-year timeframe to retirement, during which the fund could potentially grow to offset charges. On risk, the ombudsman confirmed Mr F's attitude to risk was moderately adventurous (not cautious as HRC later stated), and found the recommended portfolio appropriate given this attitude and his capacity to take risk through other guaranteed pension benefits. On alternatives, the ombudsman found Mr F's stated objectives could not reasonably have been met through other means: he did not want to use savings, did not want to borrow, and restructuring his mortgage was not viable. The ombudsman concluded that while HRC's process showed some bias towards accessing tax-free cash, the core recommendation was suitable on balance.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website