Upheld: failure to provide timely information about temporary legislative restriction on tax-free cash payment complaint against AJ Bell Management Limited
Financial Ombudsman decision DRN-6190936 of 2026-04-21T00:00:00+00:00. failure to provide timely information about temporary legislative restriction on tax-free cash payment complaint against AJ Bell Management Limited. Outcome: Upheld.
Decision detail
| Reference | DRN-6190936 |
|---|---|
| Decision date | 2026-04-21T00:00:00+00:00 |
| Firm | AJ Bell Management Limited |
| Product | pension (SIPP) |
| Claim type | failure to provide timely information about temporary legislative restriction on tax-free cash payment |
| Outcome | Upheld |
| Remedy | AJ Bell must: (1) Calculate redress based on the notional value of £1,619,144.66 if it had remained invested until 30 September 2024, minus the current pension value as at the date of final decision. If negative (a gain), no redress is payable. (2) Pay compensation into Mr V's pension plan if possible, allowing for charges and tax relief, or as a lump sum with a notional 40% reduction for future income tax if pension payment is not possible. (3) Pay £300 in total for distress and inconvenience (increasing the initial £150 offer). (4) Not carry out a loss assessment for the correct TFC amount or pay 8% interest on the TFC, as the delay was due to legislative error rather than AJ Bell's mistake. |
Summary
Mr V complained that AJ Bell failed to inform him that legislation was temporarily limiting his tax-free cash payment to £375,000 despite his underlying entitlement being approximately £1.6m. When Mr V's IFA submitted disinvestment forms in August 2024 indicating intention to withdraw the full TFC, AJ Bell did not notify him of the temporary legislative restriction until 13 September 2024. As a result, Mr V disinvested funds prematurely and suffered investment losses while waiting for the legislation to be amended in November 2024. The Ombudsman upheld the complaint, finding that AJ Bell, as the pensions administrator, should have clarified the position when it became evident Mr V intended to withdraw his full TFC entitlement. Redress is limited to losses incurred until 30 September 2024, when Mr V became aware of the restriction and could have reinvested to mitigate further losses. AJ Bell must pay compensation for the investment loss (calculated on a notional basis) plus £300 for distress and inconvenience.
The Ombudsman's reasoning
AJ Bell conflated Mr V's underlying TFC entitlement with the amount payable at a given point in time. While the delay was outside AJ Bell's control, the firm had clear opportunities to clarify the position before Mr V disinvested funds. Most critically, when Mr V's IFA submitted disinvestment forms on 14 August 2024, it was evident Mr V intended to withdraw his full TFC entitlement, and AJ Bell should have notified him at that point that legislation was temporarily limiting the payment to £375,000. As the pensions administrator responsible for paying the TFC, AJ Bell bore responsibility to explain this clearly to Mr V or his IFA. The HMRC updates were aimed at scheme administrators, not IFAs, so it was unreasonable to expect the IFA to be aware of the issue. Had AJ Bell informed Mr V earlier, he would likely have waited until the legislation was amended rather than disinvesting prematurely. However, once Mr V was aware of the restriction by 30 September 2024, he could have mitigated losses by reinvesting, so AJ Bell's liability is limited to that date.
How this compares
| Group | Decisions | Uphold rate |
|---|---|---|
| AJ Bell Management Limited, all decisions | 80 | 30% |
Source
Read the original decision on the Financial Ombudsman Service website