Not upheld: pension transfer suitability; loss of enhanced benefits; increased charges complaint against West Park Investment Partnership Limited

Decision detail

Summary

Mrs F complained that WPIP's December 2017 advice to transfer her two defined contribution pension schemes (Aviva £11,907 and Standard Life £15,751) into an existing Old Mutual Wealth personal pension was unsuitable and caused financial loss. The main concerns were that the OMW pension had higher annual charges (1.13% versus 0.5% and 0.751%), resulting in approximately £134 additional annual cost, and that the transfer resulted in loss of enhanced tax-free cash benefits from the Aviva scheme (approximately 55% of fund value versus standard 25%). The ombudsman applied 2009 and 2012 FCA guidance on pension switching and found the advice suitable because WPIP clearly documented the cost implications and loss of benefits in the suitability letter, the transferred funds matched Mrs F's attitude to risk, alternatives were properly considered, and Mrs F was placed in a fully informed position before accepting the transfer. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied the 2009 and 2012 FCA guidance on pension switching to assess suitability. On costs, while the OMW pension was more expensive (1.13% versus 0.5% and 0.751%), WPIP clearly documented this in both percentage and monetary terms (£134 per year), placing Mrs F in a fully informed position. On benefits lost, the enhanced tax-free cash from the Aviva scheme (approximately £3,600 additional tax-free cash based on 2017 values) was considered but contextualized: the Aviva scheme represented a small proportion of Mrs F's overall pension provision and wealth, the ultimate benefit would depend on future fund values given Mrs F was only 47 years old, and the benefit was clearly highlighted in the suitability letter. On ATR matching, the ombudsman found no concerns as Mrs F had been a client for several years with a well-established 'high-medium' ATR, the ten funds were a broad match to this risk level, and her ATR was reviewed every six months with adjustments made as necessary. On alternatives, WPIP appropriately considered and documented reasons for discounting leaving funds in situ, transferring to a stakeholder pension, and transferring to the occupational scheme. The ombudsman concluded the advice was suitable and Mrs F was fully informed of the key implications before accepting the transfer.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website