Not upheld: non-disclosure of charges complaint against Scottish Widows Limited

Decision detail

Summary

Mr S complained that Scottish Widows failed to disclose a 0.05% Additional Service Charge when he transferred his personal pension to a retirement account to release his 25% tax-free lump sum in October 2025. Although the charge was not mentioned during two telephone calls, it was disclosed in the Illustration document and tax-free cash confirmation letter, both received within the 30-day cooling off period. Scottish Widows paid £450 compensation representing one year of charges but refused to waive the charge entirely. The ombudsman did not uphold the complaint, finding that while the non-disclosure was an error, Mr S had sufficient opportunity to cancel the transaction after receiving written disclosure and was unlikely to have changed his decision had the charge been mentioned during the calls.

The Ombudsman's reasoning

The ombudsman acknowledged Scottish Widows failed to disclose the 0.05% ASC during the telephone calls, which was an error. However, the ombudsman applied the principle that when a business makes an error, the role is to put the consumer in the position they would have been in had the error not occurred, not to require the business to honour its mistake. The ombudsman found that Mr S was clearly settled in his decision to withdraw the tax-free lump sum due to Budget concerns and did not seek financial advice. Although Mr S may have queried the charge had it been mentioned, the ombudsman was not persuaded he would have cancelled the entire transaction. Critically, Mr S received written disclosure of the ASC in both the Illustration and confirmation documents well within the 30-day cooling off period and did not exercise his right to cancel. The ASC is a mandatory charge applicable to plans above £70,000, not optional, and would apply whenever Mr S eventually took benefits from his plan.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website