View more on these topics

L&G to pay redress over advice to leave DB scheme

Legal and General could pay up to £150,000 in compensation to a client for the advice it gave them to transfer their accrued final salary benefits into a personal pension.

In a Financial Ombudsman Service ruling, Mr B complains a Legal and General adviser he met in 1998 gave him unsuitable advice to transfer.

He was a member of his occupational pension scheme with about a decade worth of accrued benefits and his attitude to risk was recorded as ‘positive’.

Mr B was in his early forties and married with children when he was advised to transfer his benefits to a personal pension plan.

He was told the growth required to match his final salary benefits was less than 8.3 per cent per year and it was recorded he was prepared to take reasonable risk for the possibility of greater reward.

Mr B complained to Legal and General in 2017 but it did not uphold the complaint so the issue was referred to FOS where it was considered by an investigator.

The investigator thought the complaint should be upheld as the level of growth needed to match Mr B’s existing benefits was at least 8.3 per cent but nearer 9.3 per cent when taking charges into consideration.

The investigator also said it was not made clear to Mr B this level of growth would be necessary just to match his existing benefits and added he could have stayed in the occupational scheme and had the same flexibility at retirement.

Legal and General did not agree and replied it was made clear the value of the personal pension fund and the pension could fluctuate.

It added Mr B was a professional with knowledge of money matters and the growth required was recorded as not more than 8.3 per cent and not 8.3 per cent.

Furthermore, enhanced transfer values were being offered and the employer was not in a strong financial position.

No agreement was reached and the case was referred to ombudsman Keith Taylor who sided with the investigator to uphold the complaint.

He says Mr B was married with children, the occupational scheme was his main pension provision at the time and the advice given to favour a personal pension carried no guarantees.

Therefore this transaction presented a higher degree of risk than he ought to have been advised to take.

To put things right Taylor orders Legal and General to calculate redress in line with the regulator’s pension review guidance as updated by the FCA in October 2017.

Compensation in respect of any past loss should be paid to Mr B as a lump sum while any future loss should if possible be paid into his pension plan.

Taylor adds he requires Legal and General to pay Mr B compensation as calculated above to a maximum of £150,000 within 90 days of it receiving Mr B’s acceptance of FOS’s final decision.

If the amount produced by the calculation of fair compensation exceeds £150,000, Taylor also recommends Legal and General pays Mr B the balance.

Legal and General was not able to comment at the time of publication.

Recommended

Home-House-Money-Property-700x450.jpg
4

FOS penalises adviser over Harlequin Sipp property investment

The Financial Ombudsman Service has told Kingswood Financial Advisors to compensate a client over a Sipp investment in an unregulated Harlequin property fund. The case concerns Mr B’s complaints about the advice he received regarding two unregulated investments: one into a Harlequin property fund and the other into Green Oil. The ombudsman’s ruling relates to […]

2

Sesame remains top of FOS complaints list

Sesame continues to top the complaint charts at the Financial Ombudsman Service, new figures show. The network has been a leader in the list for most of the past two years, despite closing its investment advice arm in 2015. The network faced 88 complaints between July and December 2017, compared to 100 between January and […]

1

Intrinsic reports £15m loss

Losses at Quilter-owned advice network Intrinsic have increased again. The business has reported an operating loss of £15.1m in the year ended 31 December 2017, an increase on the £8.9m loss it made the previous year. According to accounts filed to Companies House, the increased loss at Intrinsic Financial Services was due to growing its […]

CurrencyCoinsGrowthInvestment440

The overdue rise of sustainable investing

Mike Fox, Head of Sustainable Investments at Royal London Asset Management argues that the recent rise in sustainable investing has been a long time coming and can provide both favourable returns for investors and a positive impact on society. Read full article here Past performance is not a guide to future performance. The value of […]

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. An ideal solution to this kind of situation would be to make the Trustees take the personal pension fund back into the scheme, and any future benefit deficit to be met by the advising firm.

    A kind of reverse CETV.

    Obviously the law would need to be changed but that really would solve a lot of the problems surrounding DB transfers.

  2. So clearly L&G will be purchasing an annuity with 50% spouses benefits to put him back into the guaranteed benefits.

    You should not be allowed to have the penny snd the bun.

    Why as it taken until 2017 to complain?

Leave a comment

Close

Why register with Money Marketing ?

Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

News & analysis delivered directly to your inbox
Register today to receive our range of news alerts including daily and weekly briefings

Money Marketing Events
Be the first to hear about our industry leading conferences, awards, roundtables and more.

Research and insight
Take part in and see the results of Money Marketing's flagship investigations into industry trends.

Have your say
Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

Register now

Having problems?

Contact us on +44 (0)20 7292 3712

Lines are open Monday to Friday 9:00am -5.00pm

Email: customerservices@moneymarketing.com