A client who complained about the FSA’s involvement in his four year High Court battle to be compensated for “incompetent” and “negligent” pension switching advice has been awarded just £1,500.
The Office of the Complaints Commissioner, which handles complaints about the FSA, published a decision last week on a complaint related to advice to transfer an occupational scheme and a retirement annuity contract to a Sipp in July 2004.
The pension plans of the complainant, who is unnamed in the decision, were transferred as a cash lump sum to the wrong provider, despite the complainant’s wish to transfer the funds in specie.
The plans were then transferred to another provider, and the client complained to his adviser about the level of penalties incurred. The complaint was escalated to the Financial Ombudsman Service in December 2006, and in July 2008 to the High Court, after the FOS advised the £460,105 being claimed was in excess of any award it could make.
The FSA cancelled the adviser firm’s permissions in April 2010, despite an email from the client’s solicitors about the ongoing litigation.
In June 2010 the FSA requested that a second firm sign a standard deed poll confirming it will be take on certain liabilities from the original adviser firm. The second firm later challenged whether it should pay any settlement to the client, which was initially rejected by the High Court before being overturned by the Court of Appeal in April this year. The client was then invoiced for the second firm’s legal costs of £67,559.
The second firm has failed to submit its latest accounts to Companies House and has cancelled its permissions to carry out regulated activity.
The client argued to the Complaints Commissioner that the FSA failed to act on his solicitors’ email about his ongoing legal battle with his adviser and allowed the firm to “phoenix” into the second firm.
In his final decision, Complaints Commissioner Sir Anthony Holland says the client received advice which displayed “considerable and continuous incompetence” on the part of the adviser firm. He says: “Succinctly put the advice was incompetent.” But he adds: “That negligent advice is particularly unfortunate but the fact of it cannot be laid at the door of the FSA as the UK’s financial services regulator.”
Holland says the FSA’s failure to pass on the solicitors’ email to its cancellation or supervision teams was a “serious act of maladministration on the part of the FSA”. But he says the losses are not a direct result of the regulator’s actions.
Holland says: “Given the serious administrative error by the FSA in losing an important email, I recommend the FSA should make an ex-gratia payment of £1,500 to the complainant. The FSA has agreed to do this.”
He adds the FSA should put in place safeguards to ensure it does not overlook relevant information where a firm applies to be deregulated. He says the regulator has shown him its proposals to set up such safeguards.