View more on these topics

Friends Life to repay customer £3k withdrawal penalty

Friends-Life-FriendsLife-700x450.jpg

Friends Life must refund a customer more than £3,000 because it did not clearly set out how she could avoid incurring a penalty for withdrawing money from her fund.

A ruling by the Financial Ombudsman Service sets out how the customer, known as Mrs C, was charged a penalty fee of £3,339.63 when she withdrew money from a Friends Life investment.

She says the form Friends Life sent her did not include the option to avoid a penalty or tell her what else she could do to avoid it, even after her adviser had asked the company how she could get around this.

The FOS says it was obvious from emails between the customer’s adviser and Friends Life that she wanted to be able to withdraw without paying a penalty and that the charge was incurred because the form was poorly written.

Ombudsman Ivor Graham says the guidance Friends Life gave the customer on how to avoid a penalty was “poor”.

Friends Life disputed it should pay back the charge because there were other parts of her investments that were not subject to a penalty. However, it admitted those other investments would have been subject to higher tax charges so the customer had opted for the most tax efficient way of taking out her money.

The provider also said the customer is now in a better financial position overall so it would not be fair to surrender the withdrawal penalty, and argued it had carried out the customer’s instructions.

Graham agrees the customer could have accessed investments worth £120,000 without paying a penalty or tax liability.

But in the final decision notice, he says: “It is reasonable to assume that she would have used these other funds rather than suffer the penalty of £3,339.63. This addresses the arguments put forward by Friends save for the claim that it was merely carrying out Mrs C’s instructions. However, I have already covered that point in my provisional decision and I see no merit commenting further.”

Graham upheld the complaint and ordered Friends Life to refund the penalty of £3,339.63 and pay her £200 in compensation.

Recommended

Wayman-Caroline-FOS-2013 700 x 450.jpg
2

FOS records surge in Sipp claims

Sipp complaints rose 9.4 per cent in the second quarter, according to the latest data from the Financial Ombudsman Service. The FOS received 427 Sipp enquiries between April and June this year. The watchdog upheld 66 per cent of these. The FOS had 390 in the same period of 2015, upholding 51 per cent. The […]

Payment-Fine-Currency-Money-700.jpg
23

FOS rules against adviser over 70-year-old’s £500k investment

The Financial Ombudsman has dismissed the claims of an advice firm that a client understood the risks of an equity-heavy investment of around £500,000. Jones Financial disagreed with an earlier adjudicator’s ruling that said Miss G should not have been recommended any investment at all. The advice firm said the adjudicator has been persuaded by […]

Mark Page: why my biggest overweight stock is a discount Spanish retailer

Artemis European Opportunities Fund manager Mark Page is questioned about the merits of investing in Spanish supermarket group, Dia. Dia is a 7,000-store Spanish discount supermarket chain. But with cheaper food prices coming on to the market and an improving Spanish economy, journalist Alexis Xydias questions Mark about its inclusion in the Artemis European Opportunities […]

The Rubik’s Cube: China’s policy trilemma

By Douglas Turnbull, Investment Director, Head of Chinese Equities China faces a ‘Rubik’s Cube’ policy trilemma, whereby it needs to sustain a minimum acceptable level of growth, deal with issues such as overcapacity and reform the financial system to make it a far more efficient allocator of capital. Given the contradictory nature of these objectives, […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

There are 2 comments at the moment, we would love to hear your opinion too.

  1. So I hope that FP collects the fee or a goodly part of it – back from the adviser who received the commission at inception! Surely too he must have known what the penalty was going to be before he encouraged the withdrawal…. as he’d know how long the client had had the bond and its original sales’ terms?

    • “She says the form Friends Life sent her did not include the option to avoid a penalty or tell her what else she could do to avoid it, even after her adviser had asked the company how she could get around this.”

Leave a comment