Writing in FT Adviser, 28 January, 2016, Damian Fantato highlights the recent case of advice re private pensions transfers that has fallen foul of a Financial Ombudsman Service (FOS) ruling.

The pension advisors have been told to compensate a client after recommending that he transferred four private pension plans to another pension provider.

FOS ruled that the advice given was unsuitable given the client’s circumstances. Financial Ombudsman Kim Parsons stated:

“The transfers cost Mr B money. He paid commission and a charges to set up the new pension plan."

“He appears to have paid higher ongoing charges. I can’t see that there was any reason to incur these costs.”

“The four previous plans wouldn’t have been difficult to monitor. Mr B didn’t have an immediate need for income. He didn’t need to transfer his plans to another to reduce risk."

“The few reasons Park Lane gave for its recommendation are not convincing.

“A number of misleading statements had been made. These included the nature of the previous funds, the previous returns and commission. The adjudicator considered it likely that Mr B had been misled during the advice process.”

One of the reasons given for the recommendation to transfer the clients private pension UK benefits into the new plan was that it would make his retirement pension plans easier to monitor.

The client said the recommendation was made on the basis that market falls were imminent but FOS felt the potential for market turbulence had been used as a way to justify the transfer, rather than it being of concern to the client. This has resulted in a miss sold pension allegation.

In response the pension advisors, Park Lane Financial Planning, disputed the fact the client had suffered a loss as a result of the advice, and said he was considerably better off.

FOS told Park Lane to compare the performance of the client’s investment with that of the FTSE WMA Stock Market Income Total Return index and pay the difference between the fair value and the actual value of the investment.