Not upheld: unsuitable pension transfer advice / pension switch complaint against Harbour Rock Capital Limited trading as Portafina

Decision detail

Summary

Mr C, aged 58 and self-employed, complained that HRC's advice to transfer his Aviva and Royal London pensions into an Aegon SIPP was unsuitable and caused financial loss. HRC recommended the transfer citing lower charges (0.52% vs 0.6% and unknown), better performance, and suitability to his cautious attitude to risk, along with optional ongoing advice at 1% per year. The ombudsman applied the FSA's 2009 pension switch checklist and found the advice suitable: no valuable benefits were lost, the portfolio matched his cautious risk profile, the new pension was cheaper than the ceding schemes when comparing like-for-like charges, and ongoing advice was offered as an optional service. The ombudsman rejected the argument that optional ongoing advice fees should be included in the cost comparison, as Mr C had not previously received ongoing advice and could cancel the service at any time. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied the FSA's 2009 checklist for pension switches, examining whether: (1) valuable benefits were lost (none were); (2) the new pension matched Mr C's attitude to risk (it did - cautious portfolio); (3) ongoing investment reviews were explained and offered (they were, as optional); and (4) the new pension was more expensive without good reason (it was not). The ombudsman distinguished between the mandatory pension charges (0.52% for Aegon vs 0.6% for Royal London and unknown for Aviva) and the optional ongoing advice fee (1% per year), concluding that including the optional ongoing advice fee in a cost comparison was not a like-for-like comparison since Mr C had not previously received ongoing advice. The ombudsman noted that Mr C chose to purchase the additional ongoing advice service and could have cancelled it at any time. The advice fee itself was reasonable as HRC would have incurred costs even if advising Mr C to retain his existing pensions.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website