Partially upheld: communication failures, refund processing delays, failure to provide informed choice regarding unit selling process complaint against OCTOPUS MONEY UNIT TRUST MANAGERS LIMITED

Decision detail

Summary

Ms K made a £10,000 pension contribution on 2 April 2025 but realised within an hour she would not receive tax relief on the full amount due to her £0 UK earnings. She requested a refund, and Octopus Money initially provided misleading information suggesting it could be easily refunded. On 4 April, Octopus Money's final response stated the full £10,000 would be refunded to her card, but failed to explain that this required selling down the units purchased with the contribution. The units were sold between 10-16 April during a market downturn, resulting in a refund of £9,555.18 instead of £10,000. The ombudsman found Octopus Money was not legally obligated to refund the contribution but had exercised discretion to do so. While the firm's communication failures warranted compensation, the ombudsman rejected Ms K's claims for the full £10,000 refund, finding she would likely have sought the refund anyway and that the market loss was attributable to her decision to change her contribution amount. The ombudsman ordered an additional £100 compensation for failing to provide clear information about the unit selling process before proceeding.

The Ombudsman's reasoning

The ombudsman found that while Octopus Money was not legally obligated to refund the contribution (as Ms K's error was not a genuine error by a third party and her earnings were £0), they exercised discretion to do so. However, Octopus Money failed to clearly communicate the unit selling process before proceeding, depriving Ms K of an informed choice. The ombudsman concluded that even with full information, Ms K would likely have still sought the refund given her primary objective was obtaining tax relief and her strong belief in her entitlement. The ombudsman rejected claims of contractual obligation and promissory estoppel, finding Ms K did not suffer substantial detriment as she had not changed her position. The market loss of £444.82 was attributed to Ms K's decision to change her contribution amount, not Octopus Money's actions. Octopus Money's compensation of £125 plus interest adequately addressed the communication failures and delay, but an additional £100 was warranted for depriving Ms K of an informed decision about the unit selling process.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website