Not upheld: unsuitable pension transfer advice complaint against ilumiti LLP (trading as Informed Pensions)

Decision detail

Summary

Mr H complained that IP's advice not to transfer his occupational DB pension scheme to a personal pension caused him to miss out on a time-limited enhanced transfer value of £41,593. IP had recommended he remain in the DB scheme, which would provide guaranteed income of £1,340 per year for life, because the cost of purchasing equivalent benefits (£63,484) exceeded the ETV by £21,891. The ombudsman found IP's advice was reasonable and suitable under FCA regulations, which presume DB transfers are unsuitable unless clearly demonstrated to be in the client's best interests. Although Mr H had stated willingness to accept investment risk and valued flexibility, his low capacity for loss, manageable financial position, and lack of urgent need for funds supported retaining the secure, escalating DB income. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied FCA principles and COBS 19 requirements, which establish that DB transfers should only be recommended if clearly demonstrated to be in the client's best interests. The ombudsman found that IP's analysis was sound: the ETV of £41,593 fell £21,891 short of the cost to purchase equivalent guaranteed benefits, and Mr H's low capacity for loss, combined with his lack of urgent need for funds and absence of firm retirement plans, meant the recommendation to retain the secure, escalating DB income was reasonable. Although Mr H stated willingness to accept risk and valued flexibility, his circumstances and the regulatory presumption against DB transfers supported IP's advice. The ombudsman also noted that Mr H was informed he could pursue a transfer with another adviser if he wished.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website