SJP call centre told client the withdrawal could be processed in five working days
St James’s Place must compensate a client who complained the failure to process a withdrawal from his pension before the end of the tax year led to him paying too much income tax.
Initially, the Financial Ombudsman Service adjudicator did not uphold the complaint, however the complainant asked for it to be reviewed and the ombudsman reversed the decision.
According to the FOS decision, in March 2016, Mr C had asked his adviser if he could take cash from his pension but the adviser said he did not think he could process the withdrawal before the end of the tax year.
Mr C then called SJP where one of the call centre staff said there was a five working-day turnaround to process his request. Mr C was told all he had to do was put his request in an email.
Mr C emailed SJP on 16 March 2016 and was then sent a form asking him to provide more details. He was told that if he wanted his benefits before the end of the tax year SJP would need to receive the form before 4 April.
SJP got the form on 1 April. Mr C was then sent another form and was told his request would not be processed for 10 days.
The Ombudsman upheld the complaint and ordered SJP to pay £300 in compensation for inconvenience caused and also to pay redress for the tax loss suffered as a result of SJP’s actions.
Mr C accepted the Ombudsman’s decision but said he should be fully compensated for losses he would have incurred if he had made all of the withdrawals he had planned.
He said urgent planned house renovations had been postponed for a year because of SJP’s failure and because his “headroom” for the 2015/16 tax year had been lost he would have to take the full withdrawal for the 2016/17 tax year.
He said that because of the 40 per cent tax on this amount this would mean an additional withdrawal of £7,715 would be needed to arrive at the full amount he would have received if he had taken £36,000 in the 2015/16 tax year and £45,000 in the 2016/17 tax year.
Mr C said he should be compensated for paying a higher level of tax on a larger portion as well as for any higher tax applying to the £36,000 that was intended to be paid in 2016/17 instead of 2015/16.
With the £300 for distress and inconvenience, this would total around of £8,000 compensation.
In his final decision, the ombudsman continued to uphold the complaint and explained how he thought Mr C should be compensated.
The decision says: “What I believe Mr C should be compensated for is what extra tax he would have had to pay in 2016/17 on the money that should have been paid in 2015/16. His P60 for 2015/16 indicates income of £5,885.24 which he says was his only income that year. In 2016/17 Mr C says his income was £9,212.39. So it would be whatever additional tax would have been generated by taking the withdrawal in the higher income period.”
It adds: “I require St James’s Place Wealth Management to pay the difference in tax between that which would have been payable had Mr C’s pension withdrawal request been actioned in the 2015/16 tax year rather than the 2016/17 tax year. This will be based on the sums detailed in Mr C’s withdrawal requests received by St. James Place in the 2015/16 tax year.”