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FOS orders SJP to compensate for 22-year-old advice

Money-Cash-Coins-GBP-Pounds-UK-700x450.jpgSt James’s Place Wealth Management has been ordered to compensate a client for pension mortgage advice given in 1994 after initially complaining he was wrongly charged for life cover included in the pension plan.

The complainant, Mr D, was advised to start a pension plan and link this to a mortgage repayment. He complained about the life cover because he thought it was free and said SJP never told him about the costs.

Mr D stopped paying into the plan from August 2014 and said that, over the 20 years of the plan, he had never been told about the costs of the life cover.

According to the FOS decision, SJP said they could not be sure the advice was right for Mr D.

They worked out his losses on the basis that the client should have been advised to start a repayment mortgage instead of a pension mortgage and said that if the plan was re-worked to show no life cover then the transfer value would be higher, which would affect the compensation offer.

The complaint was referred to the FOS and the adjudicator ordered SJP to pay redress to the client, however Mr D did not accept the adjudicator’s findings.

He said SJP had changed the nature of his complaint and had failed to ensure the pension plan’s fund would deliver the mortgage amount of £52,500 which was a condition of the contract.

He also wanted an offer to be worked out that would result in a payment to him of £92,400.

The complaint was then referred to ombudsman Roy Milne who agreed with the adjudicator.

He said: “There are some issues about whether the advice was suitable for Mr D. He’s complained about the cost of life cover and the performance of the pension fund. In my view, that indicates that he didn’t understand how the pension was intended to repay his mortgage. So, I think it’s right that he’s compensated for that advice.”

Milne added: “If Mr D hadn’t been advised to use a pension to repay his mortgage I think it’s reasonable to assume that he would have had a repayment mortgage. The comparison to be made has to look at the difference in the capital that would have been repaid and the difference in costs. St James’s Place has agreed to ignore the savings Mr D made. Those savings were for more than the cost of the life cover Mr D had paid.”

Milne said his aim was to put Mr D in the position he would be in had he had a repayment mortgage.



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There are 3 comments at the moment, we would love to hear your opinion too.

  1. I thought the FOS said they didn’t apply today’s standards and conditions to historical advice?

  2. Yet again.

    Yet again we have the FOS exposing their rump to the industry by second-guessing the advice process. Years back pension-linked mortgages were considered a tax-efficient means of repaying a mortgage. The Ombudsman, who has never been an adviser, considered that a repayment mortgage would have been a better method.

    Frankly, who cares what he thinks? It is only the power given to the FOS via the FCA that allows this insidious judgemental situation to prosper.

    For those who have yet to realise the reality here is a aid memoire;

    There is no independent appeals process

    The FOS can award up to £150,000 which is then ratified, if necessary, by the courts

    There is no right of a personal hearing

    The FOS can turn down the original complaint but then invent its own which it then upholds

    Ombudsmen are not required to meet any minimum qualification standard

    The industry is not protected by a 15 year longstop

    The FOS supposedly abides by the 3 & 6 year time-barring rules as laid down in the Limitation Act but is able to twist, swerve and deviate from them when it feels like it

    The industry was meant to be protected by 2001 Statutory Instrument 2326 which states that when investigating pre-2000 business the FOS has to consider what the previous ombudsman body would have done. This is totally ignored in line with the rest of the industries legal rights.

    As always, if you wave the consumer flag you can get away with pretty much any illegal, unethical and downright duplicitous behaviour.

  3. paolo standerwick 18th June 2016 at 5:15 pm

    Another big mistake by the omdudsman. Our dear old friend Crash Gordon should also be held to account. When on 1997 lovely New Labour can to power Crash Gordon retrospectively stole the tax credits in all private pensions. This not only had a major effect of damaging the stock market, decimating final salary schemes and affecting the value of our pensions just like this one has been adjudicated on. Thanks to this the target mortgage debt was less likely to be met. Flawed people giving flawed results with jo accountability. And they call our country democratic!

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