The Financial Ombudsman Service appears to be acting above the law and giving poor financial recommendations, a former chartered adviser has claimed after a ruling demanded he compensate a client for poor advice despite placing him into a better-performing drawdown product.
Bruce Jamieson, former principal of West Sussex-based Jamieson Financial Management, said he had been ordered by Fos to compensate a client and put him into an index-linked annuity, despite the low rates available.
Mr Jamieson, who retired last year from the industry after 49 years and is now based in Italy, was also ordered to pay the client £500 for distress. He said: “The decision was very unfair. I have no way of challenging it.”
In 2010 Mr Jamieson advised the client to transfer his pension with former employer the NHS into an income drawdown arrangement with LV=.
Mr Jamieson said his former client had financial difficulties that could be paid off through the £77,000 tax-free cash that would be released, and an income of £12,000 a year. This income was higher than the client would have received if he stayed in the NHS scheme, according to Mr Jamieson.
However a year later the client complained about the advice to Fos. Adrian Hudson, the ombudsman in charge of the complaint, decided Mr Jamieson had not considered the client’s risk appetite and should compensate him.
The client should be placed into an index-linked annuity, Fos has said. As the adviser is no longer trading the transaction has gone through the client’s new IFA, Applewood Independent.
Mr Jamieson said the decision does not take into account the suitability letter and notes from a meeting with the client’s wife, which alleged the client had a gambling addiction. Furthermore the client was receiving more through the drawdown scheme than he would have done with the NHS scheme.
David Pritchard, managing director of the Nantwich-based firm, said: “He is an ex-client. We have tried to do our best for him”.
A spokesman for Fos said: “We consider all information. We are not necessarily giving advice but looking to put the consumer back into a position had an error not been made.”
Asked if a client could complain about Fos’s advice, the spokesman said: “Our decision is legally binding if they accept it, or they can apply to the courts.”
