Not upheld: alleged misleading information regarding tax-free cash entitlement from SIPP complaint against Hargreaves Lansdown Asset Management Limited

Decision detail

Summary

Mr S complained that HL misled him about how much tax-free cash he could take from his SIPP, causing him to make an offer on a house based on incorrect expectations. Mr S believed he could access approximately £212,000 in tax-free cash based on his total pension value (SIPP plus drawdown), but HL later clarified he could only take 25% of his SIPP value alone, which amounted to approximately £117,000. The ombudsman found that HL provided correct information in response to Mr S's questions, but there was a fundamental mismatch: Mr S asked theoretical questions about his lifetime allowance limits rather than asking how much he could actually take from his SIPP at that time. The ombudsman concluded that Mr S's misunderstanding—particularly that his drawdown account could be included in the calculation—was his own error, not HL's fault, and that both parties acted in good faith. HL's £100 compensation was deemed adequate, and the complaint was not upheld.

The Ombudsman's reasoning

The ombudsman concluded that HL provided correct information in response to the questions Mr S asked. The core issue was a mismatch between what Mr S wanted to know (how much tax-free cash he could take from his total pension provision) and what he actually asked (theoretical questions about his allowance limits assuming he had unlimited funds). Mr S asked about his Lump Sum Allowance (the theoretical lifetime limit) rather than asking how much he could actually take from his SIPP at that time. Had Mr S asked the latter question, HL would have told him 25% of his SIPP value. The ombudsman found that Mr S's misunderstanding that his drawdown account could be included in the calculation was his own error, not HL's fault. The ombudsman noted that Mr S, being a former financial adviser, may have been expected to understand that crystallised money could not be accessed again for tax-free cash purposes. Both parties acted in good faith, but the wrong questions were asked and therefore answered.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website