Not upheld: unsuitable pension transfer advice complaint against ART Holdings Limited trading as MFS Independent Financial Advisers

Decision detail

Summary

Mr H complained that MFS wrongly prevented him from transferring his defined benefit pension (Pension I) with a CETV of over £700,000 in 2022, causing him significant financial loss when the CETV subsequently fell and his other pensions grew. MFS had recommended against the transfer based on Mr H's circumstances, including that he had no pressing need for the funds, would lose guaranteed benefits, face a £93,000 tax charge, and likely be worse off in retirement. The ombudsman found that MFS's recommendation to defer the transfer decision until closer to retirement was suitable for Mr H's circumstances at that time, as he had sufficient other assets and income, and his stated objectives were aspirational rather than pressing needs. The ombudsman rejected Mr H's arguments that hindsight events (CETV fall, pension growth, employment difficulties) demonstrated the advice was unsuitable, as these could not have been foreseen in 2022.

The Ombudsman's reasoning

The ombudsman applied the FCA's starting assumption that DB pension transfers are unsuitable unless clearly demonstrated to be in the client's best interests. The ombudsman found that Mr H had no pressing need to transfer Pension I as he had sufficient liquid and other assets, had secured employment meeting his income needs, and his stated objectives (holiday home, house renovation) were aspirational rather than pressing needs. The transfer would have resulted in Mr H giving up guaranteed, risk-free increasing income and likely obtaining lower retirement benefits, with an additional £93,000 Lifetime Allowance tax charge. The ombudsman noted that while Mr H's adviser may have supported the transfer, MFS as a firm was not obliged to proceed against its advice, and the recommendation to defer was suitable given Mr H's circumstances at that time. The ombudsman rejected Mr H's hindsight arguments about the CETV fall and subsequent pension growth, noting these could only be known in hindsight and MFS had made clear that CETVs could change.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website