Not upheld: Advice error - misinterpretation of internal guidelines leading to unsuitable product recommendation complaint against Skipton Building Society

Decision detail

Summary

Ms B complained that Skipton's adviser incorrectly recommended transferring £30,000 from her cash ISA to a Stocks and Shares ISA instead of to her pension in February 2025, causing her to miss the 2024-25 tax year deadline and lose £6,000 in tax relief. The adviser had misunderstood Skipton's guidelines, which would have supported a pension investment given Ms B's earnings and adequate emergency fund. Although Skipton later corrected the error and moved £24,000 to her pension in June 2025 (now in the 2025-26 tax year), Ms B sought compensation for the lost tax relief and refund of the £600 advice fee. The ombudsman found Ms B would likely recover the tax relief position by April 2027 through future contributions and upheld Skipton's offer of £262.80 financial compensation plus £125 for distress, rejecting the fee refund claim.

The Ombudsman's reasoning

The adviser's misunderstanding of Skipton's guidelines was likely unintentional. While ISAs and pensions serve different purposes, Skipton's guidelines reasonably supported a pension investment given Ms B's earnings, adequate remaining emergency fund (£34,000), and demonstrated preference for pension funding. Ms B would not permanently lose tax relief because she would likely catch up through future contributions by April 2027. The £262.80 compensation for investment timing loss is reasonable as the ISA slightly outperformed the pension during the delay period. The £600 advice fee is not refundable as Ms B would have paid for advice regardless, and she may incur further fees if moving remaining ISA funds to pension. The £125 distress award is appropriate given Skipton's proactive remediation before complaint was raised.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website