Upheld: Account administration errors complaint against Prudential International Assurance Plc trading as Prudential International

Decision detail

Summary

Mr and Mrs L invested £1.4 million in an offshore investment bond with Prudential in 2016, which allowed tax-free withdrawals of up to 5% annually. In May 2024, they requested a withdrawal of £674,983.98 with explicit notes stating they wanted to 'maximise' their 5% allowance and avoid 'no chargeable gain'. Prudential processed the withdrawal without querying that the amount exceeded the tax-free allowance, resulting in an unexpected tax bill of at least £30,000 in June 2025. The ombudsman upheld the complaint, finding that Prudential should have checked with Mr and Mrs L before processing the form given the clear indication of their tax-free withdrawal intention, and ordered Prudential to reverse the tax event or pay the tax bill plus £400 compensation.

The Ombudsman's reasoning

While Prudential provided an execution-only service and were not responsible for tax advice, they had a responsibility to treat Mr and Mrs L fairly and have regard for their interests. Given that Prudential was aware from multiple calls and the withdrawal form notes that Mr and Mrs L's clear intention was to withdraw only the maximum tax-free amount, it was reasonable to expect Prudential to query the withdrawal before processing it. The withdrawal form explicitly stated 'no chargeable gain' which conflicted with the amount requested, and Prudential's own complaint response acknowledged their payments team should have questioned this instruction. Had Prudential checked with Mr and Mrs L, they would have amended their request to stay within the tax-free allowance.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website