International advice firm deVere UK must pay compensation to a woman who complained about how the firm managed her overseas pension transfer.
The complainant, Mrs M, transferred her UK pension into a qualifying recognised overseas pension scheme on the advice of a Cyprus-based business in 2008.
The Cyprus business is outside the jurisdiction of the Financial Ombudsman Service, but the complaints adjudicator took issue with the actions of deVere in the UK, which Mrs M first contacted in 2012 after she returned to Britain.
An April 2012 report by deVere showed Mrs M’s valuation as £48,050. The original transfer into the QROPS in June 2008 was for £73,823. Mrs M’s main investment was in RBS shares and deVere said she was reluctant to sell this as it had already lost more than one third of its value.
According to the FOS decision, Mrs M could not recall saying this, even though she acknowledged a meeting took place after she returned to the UK and that she had had a lot of contact from a number of advisers at deVere.
Mrs M did not receive advice from deVere until a review in 2014. Her risk attitude was deemed cautious to moderate and her aim was to get the QROPS into the UK, to reduce charges and to improve investment returns.
DeVere recommended a switch from RBS’s dynamic asset allocator into a mixture of cash and funds. Mrs M was advised to keep the existing investment in the RBS GBP managed fund.
In January 2015 the value of the fund had increased to £49,937 but a year later it had fallen to £47,586. She complained about the drop in value and said she no longer wanted deVere to look after her pension.
DeVere said the advice was in line with Mrs M’s attitude to risk and that it tried to help transfer her away from the QROPS when there were problems with the indemnity form relating to the transfer with the QROPS trustees.
The FOS adjudicator said the 2014 advice was not unreasonable, however, they said deVere should have looked at transferring the QROPS earlier, even though any transfer before 2016 would have resulted in an exit charge.
The adjudicator recommended compensation for the trouble and upset caused to Mrs M around the numerous advisers she saw and “lack of advice”.
The complaint was later referred to ombudsman Adrian Hudson whose decision says: “The QROPS plans had a high level of penalties applied if it was to be surrendered. It was noted by deVere that the QROPs was heavily overweight in one investment and that Mrs M was unhappy that the value of this investment had fallen so much.”
Hudson agrees the portfolio recommended by deVere was not inappropriate for someone with Mrs M’s risk appetite.
However, he adds: “It is clearly disappointing for Mrs M that having paid her higher fees in the hope of obtaining higher rates of return that these were not achieved. However, it is important to note that the higher returns were not guaranteed and unfortunately did not arise.”
Hudson says: “I have seen that the adjudicator proposed an award of £300 for the distress and inconvenience that Mrs M suffered with regard to an indemnity form that has now been resolved. I consider that this fair and reasonable and I make no further award. I uphold this complaint against deVere and Partners (UK) Limited but in part only. I award Mrs M the sum of £300 for the distress and inconvenience she has suffered.”
deVere UK confirmed this month it has agreed to stop providing pension transfer reports as the FCA has launched an investigation into it.