Not upheld: pension withdrawal processing and information provision complaint against Scottish Widows Limited (trading as Clerical Medical)

Decision detail

Summary

Mr E requested to withdraw tax-free cash from his stakeholder pension with Scottish Widows. He selected the 'partial pension encashment' option instead of the correct 'flexi-access drawdown' option, resulting in receiving £9,972.80 instead of the expected £12,500, with 75% of the withdrawal being subject to tax. Mr E complained that the process was confusing and that Scottish Widows failed to adequately warn him he was selecting a taxable option. The ombudsman found that Scottish Widows provided clear information with prominent warnings that partial encashment was not suitable for accessing only tax-free cash, and that Mr E's mistake was his own error rather than caused by unfair treatment by the firm. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman concluded that Scottish Widows provided clear, fair and not misleading information throughout the process. The documentation prominently displayed (not buried in fine print) that partial pension encashment would result in only 25% being tax-free and 75% being taxed, and explicitly warned that this option was not suitable if Mr E only wanted to access tax-free cash. The ombudsman found that Mr E's mistake in selecting the wrong option was his own error, not caused by unfair treatment by Scottish Widows. The ombudsman rejected arguments about vulnerability, process confusion, and rushed timescales, noting that Mr E did not disclose financial pressures when asked, confirmed he had no difficulty understanding the information, and controlled the speed of form submission himself.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website