Not upheld: failure to warn of annual allowance breach; alleged duty of care breach complaint against Hargreaves Lansdown Asset Management Limited

Decision detail

Summary

Mr M complained that Hargreaves Lansdown failed in its duty of care by accepting a £60,000 employer pension contribution in February 2025 without warning him that it would breach his annual allowance, resulting in a £24,000 tax charge. Mr M sought either return of the contribution, reallocation to the next tax year, or compensation for the tax charge plus distress and inconvenience. HL declined the complaint, explaining it provided execution-only SIPP services and was not responsible for assessing annual allowance positions. The ombudsman upheld HL's position, finding that as an execution-only service provider, HL was entitled to process contributions in accordance with Mr M's instructions without assessing tax consequences. The ombudsman noted that Mr M, as both SIPP member and contributing employer, was responsible for determining appropriate contribution levels, and that the SIPP documentation clearly informed him of the annual allowance rules. Pension legislation strictly limits refunds to genuine third-party errors, not to situations where an individual intentionally makes a contribution with adverse tax consequences.

The Ombudsman's reasoning

The ombudsman found that HL provided services on an execution-only basis, meaning it was responsible for administering the SIPP and carrying out Mr M's instructions, not for assessing his tax position or annual allowance. The annual allowance depends on multiple personal factors (carry forward allowance, other pensions, income tapering) which HL could not reasonably be expected to know. The application form directed Mr M to review the SIPP Key Features Document, which contained clear information about the £60,000 annual allowance and stated that contributions could not be refunded solely on grounds of exceeding the allowance. Mr M, as both SIPP member and contributing employer, was responsible for determining appropriate contribution levels. The fact that HL later sent a warning letter in July 2025 did not create an obligation to monitor contributions during the tax year itself. Pension legislation strictly limits refunds to genuine errors made by third parties, not to situations where an individual intentionally makes a contribution that has adverse tax consequences. The tax liability arose from Mr M's decision to make the contribution, not from any error or unfair treatment by HL.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website