The Financial Ombudsman Service has rejected a complaint from a former HSBC customer who claimed the £9,000 commission he paid for a pension transfer covered ongoing advice.
The customer, described by the FOS as Mr S, arranged a self-invested personal pension plan through HSBC in January 2010 with regular monthly contributions of £5,000.
Commission of £9,000 was paid to HSBC, which was deducted from the Sipp over 12 months.
Mr S claimed the commission covered ongoing and initial advice. He says when he approached HSBC to carry out a further transfer, and was told the bank was no longer undertaking pension transfer business, he was therefore unfairly forced to incur additional costs through another adviser.
He also claims he lost money as a result of HSBC errors. The bank has offered £1,000 in compensation, which he rejected.
Mr S says he was told the initial commission on his Sipp would cover all future advice, and that HSBC provided subsequent advice without a charge, which he says demonstrates the commission was intended to cover future advice. Mr S says he is entitled to a full refund of the £9,000 commission.
However, documentation from the time indicates the commission was only in respect of the initial advice.
Ombudsman Terry Connor says: “In the absence of any documentation from the time which would support the verbal assurance which Mr S says he was given, I am unable to conclude that any contractually binding agreement was in place to provide ongoing advice without further charge.”
He adds: “In my opinion, HSBC’s decision to stop offering advice on pension transfers was a legitimate business decision.
“I appreciate though that this caused Mr S considerable inconvenience as he needed to seek advice from a different adviser in respect of the further pension transfer he wished to implement. However, I consider that it is more likely than not that had HSBC provided this advice they would have charged a fee or received commission.”
He says it would therefore be “inappropriate” to recommend the initial commission be refunded.
Connor says that although initial commission of £9,000 is “significant” in the context of monthly contributions of £5,000, he is not persuaded that Mr S only accepted the cost because he had a “reasonable expectation” that he would receive future advice from HSBC at no extra cost.
The FOS rejected the complaint, concluding that HSBC’s offer of £1,000 compensation is “fair and reasonable”.