The Financial Ombudsman Service has ordered Legal & General Assurance Society to compensate two investors over unsuitable pension transfer advice given 21 years ago.
In two final decision notices from September, published this week, the FOS says L&G should not have advised the transfers into personal pensions.
In the first case, Mrs A was contacted by L&G in 1993 and told she should transfer her £20,451 pot out of a defined benefit scheme and into a personal pension.
She was 31, self-employed and told she needed to make a return of 10.2 per cent a year to match her existing benefits.
The ombudsman found that Mrs A’s very cautious attitude to risk should never have seen her transferred into a personal pension.
It said she was given “unsuitable” advice to transfer out of a DB scheme and into a mixture of with profits and investments.
In the second case, Mr C was contacted by L&G in 1993 and told to transfer out of his existing workplace scheme.
He was 42 and told he needed to make 9.9 per cent a year to match his existing benefits.
L&G recommended the transfer would provide “likely benefits” which FOS says amounted to advice.
Mr C had declined to answer the majority of L&G’s questionnaire including questions over his attitude to risk and personal circumstances.
Ombudsman Adrian Hudson said he should have been treated as execution only or an insistent transfer but was not.
He said: “At the time of advice to transfer the pension benefits that Mr C had built up in his former employer’s pension scheme were his only provision at risk by transferring to a personal pension arrangement.”
FOS says compensation should be made via the Pension Review redress programme, which compensates those who have seen bad pension transfer advice.
Pension providers have expressed alarm over the possibility of a flood of insistent transfers out of defined benefit schemes to enjoy the new Budget freedoms. Pensions minister Steve Webb says any saver who wishes to ignore advice should not be blocked from transferring.
Legal & General refused to comment.