Intrinsic has compensated a client after one of its appointed representatives recommended a pension switch based solely on a fact find and risk questionnaire carried out by another employee and without speaking to the client first.
A letter from Intrinsic about the complaint, seen by Money Marketing, outlines the compensation that will be paid, which amounts to £2,114.31 to account for the change in value of the client’s pension, plus a further £500 for the trouble and upset and caused.
The firm involved in the complaint is Intrinsic appointed representative Edward Bond Wealth Management.
The client originally saw an employee of the firm in February this year where a fact find was completed and the firm was given permission to look into the client’s Prudential pension. It is understood the client was referred to Intrinsic by an introducer.
An attitude to risk questionnaire was also completed and the client was assessed as having an adventurous attitude to risk, which was later changed to “moderate”. The client said he wanted a recommendation that was in line with his attitude to risk but also benefited from a “multi-manager type” fund.
The adviser, Daniel Bowles, recommended the client transfer his Prudential pension, which was invested in the provider’s with-profits fund, to an Aegon ARC Sipp, investing in the Cirilium Moderate Fund.
The adviser recommended the transfer to provide a variety of possible funds, to move away from a with-profits fund which had poor returns in the past few years and to align the fund to the client’s attitude to risk. He also said a multi-manager fund would allow the client to invest in a wider range of assets without having to increase his exposure to higher risk assets.
The suitability letter also confirmed the provider, fund and adviser charges would reduce the growth of the Aegon fund by a net 2.9 per cent a year.
The recommendation was documented in a suitability letter on 10 March. According to the letter from Intrinsic, the adviser admitted to only speaking with the client once to discuss his recommendations – on 28 March, two weeks after the suitability letter was drawn up.
In the letter, Intrinsic says the fact find and attitude to risk questionnaire would not be sufficient to determine the client’s desire for a multi-manager fund or their reasons for that.
The letter says: “This may have been discussed and established when the adviser spoke with the client on 28 March 2017 but this was after the recommendation to transfer had already been established.”
However, Intrinsic says it does not consider the recommendation was unsuitable for the client, even though the correct process was not followed.
The client signed the forms for the transfer so it could not be reversed, therefore Intrinsic offered to refund the difference in the transfer value and the current value of the pension. The lower value was mainly due to an initial adviser charge.
An Intrinsic spokesman says: “Intrinsic is focussed on ensuring it delivers good customer outcomes through high quality advice. While the advice in this instance was suitable, the advice process did not meet the network’s expectations and we have refunded the client accordingly. We will continue to work closely with advisers across the network to ensure that they apply appropriate processes to the delivery of advice.”