The Pensions Ombudsman has ruled AJ Bell must compensate a client for investment losses attributable to a botched transfer to James Hay Partnership.
Mr R’s complaint against AJ Bell is it was partly responsible for the delay in the transfer of funds that shut him out of the market and lost him thousands of pounds.
In January 2017, Mr R told AJ Bell he wanted to transfer money held by his investment manager Cofunds to a cash account at AJ Bell Investcentre Sipp.
The transfer was made two days later, when AJ Bell received £257,831 from Cofunds.
Only days after that, AJ Bell requested Cofunds to make a full cash transfer to it and to confirm Mr R’s Cofunds account had been closed, so all the Sipp funds could be transferred to James Hay.
AJ Bell emailed Mr R to say it would arrange for the account to be closed and for payment to be made to James Hay, and Mr R would not need to take any further action.
In February 2017, Cofunds told Mr R his investment account had been closed and five days later, having heard nothing more, AJ Bell asked Cofunds for an update.
In a February letter to AJ Bell, Mr R complained that AJ Bell had still not completed his transfer and there was a balance of £6.33 remaining in his Cofunds’ holding account.
Mr R complained AJ Bell could have transferred £362,519 to James Hay for reinvestment in January 2017, including the sale proceeds of a property but it had chosen not to do so because it was waiting for the transfer of £6.33.
This delay meant he had been locked out of the market for much longer than necessary and was advised an investment portfolio resembling the one that he would have invested in had grown by 2.31 per cent.
On the assumption only 80 per cent of his money would have been reinvested in the meantime, he calculated his loss was £6,699.
He asked AJ Bell to make good the loss, saying it had caused a completely unnecessary delay.
After receiving Mr R’s letter, AJ Bell asked Cofunds for an update. The platform said Mr R’s account had been closed on 8 February and Mr R was notified about this.
AJ Bell then emailed Mr R to explain the delayed transfer was due to it not receiving confirmation earlier from Cofunds that the account had been closed.
It said this step was necessary before AJ Bell could wind up the plan, to ensure there were no residual assets.
To settle the matter AJ Bell offered to waive its usual transfer fee of £75 plus VAT and its same day transfer charge on its payment system of £25 plus VAT.
Mr R refused the offer because he thought the amount was insignificant when compared to his financial loss suffered as a result of the unnecessary delay.
He said he expected to be out of the stock market for only ten working days and would liaise with James Hay’s investment team to quantify his financial loss from then to the date it received the money.
Later in February 2017, AJ Bell transferred £362,557 to James Hay waiving its usual charges, and at the beginning of March, Mr R received email confirmation of the completed transfer.
After discussing the matter with James Hay’s investment team, Mr R emailed to AJ Bell relevant documentation to show his lost investment return since 26 January 2017 was 1.5 per cent.
This equated to a loss of £4,351 calculated on the assumption only 80 per cent of the funds would have been reinvested initially.
Mr R asked AJ Bell to pay him that amount and it formally responded to Mr R’s complaint in a letter dated 15 March 2017.
It apologised for its recent level of service and admitted that it could have chased Cofunds sooner, and more frequently, when Cofunds failed to inform it that the investment account had been closed.
However, AJ Bell said it had completed the transfer waiving all its usual charges within one working day after it received Cofunds’ confirmation.
AJ Bell said in the circumstances it would not be appropriate for it to cover any investment loss that Mr R may have incurred.
The adjudicator said AJ Bell was responsible for the delayed transfer and subsequent losses Mr R suffered.
AJ Bell did not accept this view and the complaint was passed on to Pensions Ombudsman Anthony Arter.
Arter says although AJ Bell gave Cofunds clear instructions to transfer the money on 16 January 2017 and followed up on 13 February 2017 to check, it should have done this sooner.
Checking sooner would have resulted in a quicker transfer and no problem would have emerged.
He adds Cofunds was not named by Mr R as a party to his complaint, so no finding can be made against it.
To compensate Mr R, AJ Bell must pay £4,351 which is the amount lost calculated on assumption only 80 per cent of the funds would have been reinvested initially.
AJ Bell was not available to comment.