However, when Mrs L did not agree with this, claiming that she had not received a suitability report in 2020 and hadn’t consented to the transfer, she raised a complaint with the Fos.
Decision
In its decision, the ombudsman ruled in favour of Mrs L, explaining there was no disagreement between Mrs L and On-Line Partnership that it was inappropriate for her Sipp funds to be held in cash rather than invested in an equity based fund.
“On-Line has clearly made a mistake here”, it stated.
However, the ombudsman identified the area of disagreement as Mrs L believing that her personal pension should not have been transferred to the Sipp, so the financial loss calculation should be based on the lowest growth in value of that investment.
Conversely, On-Line Partnership believed the transfer from the personal pension to the Sipp was properly authorised by Mrs L, so the loss calculation should instead be based upon the lost growth as a result of the transferred funds being held in cash.
While the ombudsman said it was not qualified to determine whether Mrs L had indeed consented to the transfer, it said the issue had “no bearing” on how its decision was reached.
Instead, the Fos stated its decision hinged on whether the advice to transfer Mrs L’s pension from her personal plan to the Sipp was “appropriate and suitable in the circumstances”.
After reviewing the evidence, the Fos ruled it was satisfied that the transfer would have resulted in Mrs L receiving a lower projected fund value at retirement while incurring higher charges.
“This does not, of course, mean that the advice was necessarily unsuitable if it met Mrs L’s objectives,” the ombudsman clarified.
However, it added that, given Mrs L only had two investments, it was not convinced that moving her pension savings onto the platform along with her Isa provided any significant benefit to her, particularly as she only gained platform access after her adviser’s death.
“In conjunction with the fact that one of the reasons to recommend the transfer being given as considering the charges on the personal pension as being ‘not competitive’, I can’t see that the advice to transfer to the Sipp was suitable for Mrs L,” the ombudsman said.
“Consequently, I’m satisfied that the transfer should not have been recommended and that Mrs L should have remained invested in the personal pension.”
Putting things right
To put things right, the ombudsman directed that On-Line Partnership should compare the performance of Mrs L’s investment with the notional value if it had remained with the previous provider from August 6 2020 until 13 and 14 March 2023, when Mrs L transferred to another provider.
