Upheld: Pension transfer advice complaint against James Brearley & Sons Limited
Financial Ombudsman decision DRN-8501887 of 2018-12-11T00:00:00+00:00. Pension transfer advice complaint against James Brearley & Sons Limited. Outcome: Upheld.
Decision detail
| Reference | DRN-8501887 |
|---|---|
| Decision date | 2018-12-11T00:00:00+00:00 |
| Firm | James Brearley & Sons Limited |
| Product | Pension |
| Claim type | Pension transfer advice |
| Outcome | Upheld |
| Remedy | James Brearley must undertake a redress calculation in line with FCA pension review guidance (October 2017) as at the date of decision using recent financial assumptions. The calculation must include a SERPS adjustment obtained from DWP. If a loss is demonstrated, compensation should be paid into Mr C's pension plan if possible (accounting for charges and tax relief), or as a lump sum with a 15% notional tax deduction if pension payment is not possible. Compensation must be paid within 90 days with 8% simple interest per annum for delays beyond 90 days. James Brearley must also pay £200 for distress caused by the impact on Mr C's retirement planning. |
Summary
Mr C complained about advice given by James Brearley in 1997 to transfer his occupational pension scheme to a Section 32 buy-out plan to enable early retirement between ages 50-55. In 2017, at age 55, Mr C discovered that GMP shortfall meant benefits would not be available until age 65, preventing his planned early retirement. The ombudsman upheld the complaint, finding the advice unsuitable because Mr C gave up valuable guaranteed benefits for investment-dependent benefits without being adequately informed of the risks or the conditional nature of early retirement. James Brearley was ordered to calculate redress using FCA pension review guidance and pay £200 for distress caused.
The Ombudsman's reasoning
The ombudsman found that although there is limited evidence from 1997, James Brearley arranged the transfer and charged for advice, therefore advice was given. The critical issue is that Mr C was giving up valuable guaranteed benefits (including a GMP of 24.54% and guaranteed increases) in exchange for benefits subject to investment risk. The transfer analysis did not make any comparison of returns needed to achieve the early retirement Mr C wanted, and the risks were not adequately explained. The ombudsman was not satisfied that Mr C was in a position to take such investment risk with a substantial part of his future pension, particularly given his stated goal of early retirement which ultimately could not be achieved due to GMP shortfall.
How this compares
| Group | Decisions | Uphold rate |
|---|---|---|
| James Brearley & Sons Limited, all decisions | 9 | 44% |
| Pension transfer advice, all decisions | 7,542 | 54% |
| Pension, all decisions | 15,579 | 47% |
Source
Read the original decision on the Financial Ombudsman Service website