The Pensions Ombudsman has rejected a complaint against LV= after a customer lost £16,000 while transferring into a new pensions policy.
Mr H complained that LV= failed to act on his instructions to cash in and reinvest his portfolios while in drawdown.
The transfer represented an internal transfer from a LV= pension policy to a new pension policy also with LV= and included three investment plans.
Mr H also asked a transfer from one of the plans, a Rathbones portfolio to MPL Investment Management’s discretionary management service as an in-specie transfer.
After cashing in the funds in the portfolio, £154,000 remained in the trustees’ bank account until the Rathbones’ investment transfer to MPL was completed eight months later.
Mr H complained that the proceeds were still in the trustees account and were not invested.
Through his adviser, Mr R, Mr H asked LV= to reinvest one of the portfolios, the Threadneedle Portfolio 6 but this was done at a higher unit price which changed in the period between September 2012, when the cash in happened, and February 2013, when LV= suggested to re-sell the portfolios.
Mr H claimed redress from LV= as the difference in unit price of £0.112 at sale represented a financial loss of £16,952.32.
But LV= explained the firm has to keep funds in the client’s account until all transfers have been received unless they received specific investment instructions and pointed out that Mr H had signed an agreement on these rules.
LV= also says the reason they did not transfer the cash available was because the
instruction letter did not confirm any request for partial transfers.
Deputy Pensions Ombudsman Karen Johnston says in her decision:”The declarations signed by Mr H clearly outline the process and warn of the potential that funds will be held in cash whilst all existing investments are being cashed in prior to the setting up the new arrangement.”
She says the letter of instruction from the IFA to immediately reinvest the cash was not clear and therefore she decided not to uphold the complaint against LV=.
She says:”If the IFA’s intention was to cash in and reinvest immediately without waiting for the in-specie investment then the IFA needed to have specifically stated that.”