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FOS rules against insistent client pension transfer


The FOS has ruled against advice firm Portal Financial after it transferred the pension of an illiterate insistent client.

The client, Mrs W, complained that she wanted to take tax free cash from her pension to pay for new solar panels. She claimed she did not realise Portal had transferred the pension until later.

In 2012 Portal had a telephone conversation with Mrs W in which it noted she needed to leave her occupational scheme to release the cash and that she could not read or write.

However, it subsequently wrote to her recommending she did not transfer from an occupational scheme and provided an insistent customer form that she signed.

The FCA published guidance on dealing with clients who go against the recommendation of an adviser in June 2015.

Portal calculated the transferred pension would need to grow by 12 per cent a year to match what the employer’s scheme would have provided. Mrs W also signed a form declaring she understood what critical yield was and the low likelihood her new scheme would return 12 per cent.

Portal said it expected Mrs W to rejoin her employer’s scheme after the transfer, but she retired with ill health in March 2014 before this could happen.

In June 2015 a FOS adjudicator investigated the complaint and was not satisfied the transfer should have been arranged, even on an insistent client basis. But Portal disagreed, saying it would have been discriminatory if it had refused to transfer because of Mrs W’s learning difficulties.

Ombudsman Adrian Hudson says: “I cannot ignore the fact that Portal knew that Mrs W could not read or write. It was required to act in the best interests of Mrs W. Portal knew that Mrs W could be worse off if she transferred from her former employer’s pension scheme.

“I take the view that Mrs W’s circumstances were such that Portal should have acted with considerable caution. If it wished to act for Mrs W, it should have given all the information she needed in order to make an informed decision – and in a format that she would have been able to understand.”

It adds: “I am not satisfied that Portal gave Mrs W sufficient detail about the benefits that she was giving up by transferring or what she could receive. In my opinion, had it done so, Mrs W  would have seen the extent of the harm that would be caused by transferring and taking her lump sum.

“I believe that she would have decided against taking benefits. If Portal having advised Mrs. W not to transfer out had not persuaded her of folly of her actions it should have in my opinion have declined to transact the business.”

The Ombudsman has ordered Portal to carry out a loss calculation based on Mrs W remaining a member of the occupational scheme. The advice firm will be liable for any loss minus 15 per cent. This takes into account the 25 per cent tax free lump sum and a basic tax rate on the remaining 75 per cent.

In addition, Mrs W will receive £250 for the trouble and upset suffered.

Read the full decision here.


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There are 26 comments at the moment, we would love to hear your opinion too.

  1. Nick Pilkington 4th April 2016 at 9:08 am

    The remark that causes me concern is that the FOS states that if Portal did not persuade her that she should not transfer then Portal should have declined the business. i.e. they do not accept the principle of an insistent client.
    However Portal should have involved a literate 3rd party of Mrs W’s choice to explain matters to her. They might then have had a stronger case to defend.

  2. All of which goes to show you can never be too careful around insistent clients – whatever the FCA (at Osborne’s increasingly desperate behest) say.

    When Adrian Hudson says “In my opinion, had it done so, Mrs W would have seen the extent of the harm that would be caused by transferring and taking her lump sum. I believe that she would have decided against taking benefits” it seems pretty clear he has never sat opposite a client who, come what may, wants that holiday, new kitchen, 88″ TV (or even solar panels) and is will have that pension cash at ANY cost.

    On the other hand, if Portal knew this client couldn’t read, they should have recorded the discussions and retained a copy of the recording.

    Better yet, insistent clients? Just say no. It’s not our job to make the Chancellors hare-brained schemes to raise tax work for him

  3. Full decision is at

    No surprises here. Not much sympathy for Portal either. You have to have been living with your head under a rock to think there is any such thing as an execution-only / insistent client transaction anymore.

    But with that out of the way, the question arises of how Mrs W managed to complain to the FOS given her illiteracy. If she had someone on hand to help her through the process of complaining to the FOS, why did they not lend her similar assistance when she was trying to take tax free cash from her pension and considering Portal’s advice?

    And it’s interesting that an illiterate person with “learning difficulties” was able to formulate a plan for home improvements and solar panels. (Though the full Ombudsman’s report notes that she did not install solar panels – once she had the cash she blew it.)

  4. They should have walked away. I do on occasions where I sniff that something may not quite be right. I have no intention of something coming back to bite me on the bum in a couple of years time because I was so desperate to flog something, which this amounts to.

  5. Sadly the case points to ‘just saying no’ and not doing the business in more and more cases. The customer is not paying a big enough fee for the vulnerability involved with the business. She could read well enough to raise a complaint no doubt via a Claims Management Company too – most odd. The reality is that the Ombudsman is not there to save a fool from parting with her money in that she has to shoulder the responsibility for the decision she took. It is not for an adviser to indemnify the actions she chose to take nor indeed, going wider, to even indemnify clients on a ‘if it succeeds everyone is fine’ basis but ‘if it fails to perform, pay up’. Sadly however, the cynic would say that as the Ombudsman with its over 200 ombudsmen and a significant staff is now big business in itself desperate to self-perpetuate to protect all those interests, it is hardly likely to get any better.

  6. The very first thing that strikes me from the article is ….. she wasn’t an insistent client, she had a defined aim, she provided all the info to said IFA, and then warned the client of the risks, she then made an informed decision ? well she could of had, if she could read !! agree with Nick (above) should have involved a 3rd party, and no-one recognizes an insistent client, I wonder if their PI will cover them ?

  7. headbelowthe parapet 4th April 2016 at 9:55 am

    This lady must surely have been a ‘vulnerable’ client? Difficult to defend their actions in this case – maybe a face to face meeting (with a third party present) would have been more appropriate than postal communication (really?) and a couple of phone calls…

  8. “I believe that she would have decided against taking benefits”

    This is the core of the problem. Regardless of the facts of the case an ombudsman can always draw this conclusion and there is no appeal (bar proving he ‘departed his senses’ when making the decision). Indeed, the logic of it is inescapable – why would ANY sane client, aware of all the facts, go against advice? Ergo, the firm acted improperly by making the transfer.

  9. And the award for trouble and upset was £250 not the £150 reported

  10. Will the loss calculations factor in the benefit she gets from her solar panels to offset the downside of the losses on the Occupational Pension.

    Also just because the literate ombudsman thinks she would have changed her mind, we have had a number of very literate and intelligent clients who have forged ahead with taking benefits under pension freedoms that are fully aware of the downsides, so why would she have been any different. The FOS are mind readers now also. No end to their talents. When an outfit like this still uses 8% interest to recompense a client it just goes to show how out of touch they are.

  11. Ralph Patterson 4th April 2016 at 10:22 am

    Much much safer to walk away from an insistent client on the grounds that ‘I wouldn’t do it for myself therefore I won’t do it for you’

  12. How did Mrs W prove her alleged illiteracy beyond reasonable doubt? Or, again beyond reasonable doubt, that she didn’t understand the significance of the course of action on which she was intent? Also, did Portal insist on a fee upfront? A minimum of £500 would have been appropriate. Had they done so (assuming Mrs W agreed to pay it, which she probably wouldn’t), they might well have taken a more robust position and declined to facilitate what they knew would be a very dangerous transaction.

    Those questions aside, I agree with the two posts above. Insistent clients? Not to be touched with a barge pole. You give the advice and if the client wants to go against it, they’ll have to go elsewhere.

  13. Lost for words !!

    Total incompetence from Portal – are they not aware that this is a sensitive area, that the FCA have published set practice guidance and as for being illiterate, this clearly shows that the advisers here are after one thing – a fast buck and in my view rightly deserved what they duly received – how can anyone be so stupid to allow this to take place !!

  14. @Julian Stevens
    “Beyond reasonable doubt” is the criminal test, the FOS should be using “on the balance of probabilities”. In practice they can simply decide based on their personal view of what is fair and reasonable. As stated, the decision itself can really only be challenged on the basis that “the decision was so unreasonable that no reasonable authority would ever consider imposing it”. It’s a tough test and I’m not aware of any legal challenges to the FOS that have succeeded on that basis.

  15. The first of many such complaints to come I fear. The catch all get out phrase that can be used if all else failed was summed up by grey area. “I believe that she would have decided against taking benefits” will get everyone in the long grass

  16. A few more points ~ despite being allegedly illiterate, Mrs W had evidently able to read (or have read to her) and understand:-

    1. her pension scheme booklet,

    2. her statement of benefits,

    3. news reports about how she is now able to extract just her tax free cash without full vesting (not, I believe, covered in any TV or radio reports, though perhaps MoneyBox would have covered it) and even what one may reasonably assume must have been

    4. a quite lengthy wad of literature about solar panels, including a contract. And

    5. did she sign the insistent client form without getting someone to read its contents to her? Assuming somebody did read the contents of the form to her, if s/he had any brains at all, s/he would have pointed out to Mrs W that, by signing it, she would be going against Portal’s advice and foregoing any right of complaint (not that that stopped her from giving it a go).

    The more you think about it, the more the whole damned thing stinks.

    • Eleanor Palmer 4th April 2016 at 4:06 pm

      Would you not think it possible that her employers explained her pension scheme when she signed up for it, that she had friends who told her about the new pension freedoms, that she received cold calls about solar panel schemes, etc. etc.?

  17. I believe that insistent and also execution only clients can fall into 2 categories; those whose actions are understandable if not the absolute best course to take, and those whose actions are irrational. In this case I believe the actions of the client to be irrational and would always refuse to carry out the transaction

  18. @P G
    “I believe” is the problem not the solution. You at least need to objectively define “understandable” and “irrational” and get the FOS to agree…

  19. headbelowthe parapet 4th April 2016 at 1:20 pm

    Would anyone else on this forum actually transact this particular piece of business on an insistent client basis, I certainly wouldn’t have (and I’m quite an advocate of the process). Do any of you actually believe that this FOS decision is unreasonable given the overall circumstances (having read the decision rather than this article)?

  20. Just don’t do it, it’s not discriminatory at all!!! Strikes me that some just see the ££’s and not the sense in walking away! I have no sympathy for either party

  21. Recording, recording, recording. Most people are lucky enough to have at least three senses, sight, sound and speech. Where one sense is missing, it is the responsibility for the one with all three senses to adjust their working practices to meet this disability or if unable or unwilling to within the price concerned, than get someone else to. We have produced large print AND audio suitability reports for nearly a decade on request. In fact many clients PREFER audio to written.

  22. A veritable can of worms, probably started by a pushy solar panel salesperson, then once she saw all that cash she changed her mind and spent it. No problem, George Osborne wants consumers to be responsible for their own decisions. The problem is that everyone who uses an adviser has a get out of jail free card, the FOS, so probably best not to play in the first place.

  23. I wonder if Rory Percival has read this and if so what does he make of it? He stated that if the adviser follows their guidelines for insistent clients then the advisers has nothing to worry about. Fro reading the story it would appear that the warnings were in place
    So on one hand the stating that if the client, despite all the warnings, still proceeds then it is a case of buyer beware so to speak
    On the other hand FOS states “that if Portal did not persuade her that she should not transfer then Portal should have declined the business”. So the FOS is going against the FCA guidelines.

  24. You’re mad to deal with insistent clients. Let’s consider a true-life scenario from another area of business:

    A taxi firm had a phone call from a woman who wanted a cab to take her to a well-known large bridge in the middle of the night because she wanted to end her life. Not unreasonably, the taxi firm declined. She then rang back and asked for a cab to a restaurant next to the bridge. The taxi firm still declined.

    How would you have reacted to the news reports if the taxi firm had behaved in any other way? If you deal with insistent clients, why should people not view you in the same way?

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