The Financial Ombudsman Service has told an adviser to refund a client’s £970 advice fee and pay 8 per cent interest, plus £500 compensation, after it refused to sign a form declaring advice had been given.
In the case, a client referred to as Mr B was advised by Lighthouse Advisory Services to transfer two existing pensions into a Sipp.
But when he chose to use a different Sipp provider to the one Lighthouse recommended, it refused to sign the appropriate form and declaration confirming it had given advice.
Lighthouse wrote to Mr B on 25 July 2017 with a report containing its recommendations for the transfer of his two pension plans into a Sipp.
It recommended Mr B transfer his two existing pensions into a Sipp with company “A” and stated the initial and ongoing fees for the transfer. Lighthouse’s letter confirmed it was “authorised to advise” Mr B on the matters covered in the report.
Mr B broadly agreed to proceed with Lighthouse’s recommendation but instead of transferring his pensions to A, he wanted to transfer them to a different provider, which the ombudsman refers to as “H”. Mr B’s research found H had lower fees.
Mr B agreed a fee with Lighthouse for the work it had done. When he then made requests to have his two pensions switched to H, both asked him to provide confirmation advice had been obtained. However, Lighthouse refused to sign the relevant form, saying it had not given advice to transfer.
The case was subsequently referred to the ombudsman as an agreement between the parties couldn’t be reached.
Ombudsman Alessandro Pulzone says: “The key dispute in this case is that Lighthouse accepts that it gave Mr B advice to transfer his pension in line with Section 48 of the Pension Schemes Act 2015.
“But it refuses to confirm that it has given Mr B advice for the purposes of a transfer which, it says, it didn’t specifically advise on. So the question is whether there’s any requirement for a consumer to follow the advice provided by an adviser, in order for that adviser to confirm that advice has been provided.”
Referring to section 48 of the Pension Schemes Act 2015, Pulzone decided there was no obligation on the advice being followed and no requirement for Lighthouse to specifically advise on where Mr B was intending to transfer his pension to, before it signs or provides confirmation.
Lighthouse disagreed with the ruling, stating that when advising on a pension transfer, FCA rules state the advice must take account of the proposed destination of the transfer funds. It maintained that signing the confirmation without completing a new report (which would attract a fee) taking into account Mr B’s proposed Sipp, would be in breach of FCA rules.
Pulzone reconsidered the case but concluded that it wasn’t fair and reasonable for Lighthouse to charge Mr B the advice fee yet decline to confirm that it provided him with appropriate independent advice.
His final decision was to uphold Mr B’s complaint and that Lighthouse must repay the fee, plus interest and compensation for “trouble and upset”.