PensionsAug 28 2014

Aegon referred to Fos over GAR cooling off period

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Leading financial adviser Harry Katz has referred Aegon UK to the Financial Ombudsman Service after being “absolutely dissatisfied” that a client was not allowed to take a tax-free pension withdrawal after changing his mind.

Mr Katz, of Middlesex-based Norwest Consultants, said he wrote to Aegon UK on 6 August complaining that his client had decided to take a tax-free withdrawal before his guaranteed annuity rate payments began, but had not been able to do so because a cooling-off period had expired.

The cancellation period began immediately after Aegon UK had issued a quotation - but Mr Katz alleged this was unusual and “disingenuous”.

He said: “Aegon is sticking to every dot and comma of their contract, but is it fair?”

The client, who was offered a GAR of 10.8 per cent, chose not to take tax-free cash until realising that the annuity would be paid in arrears yearly.

In an email response dated 19 August, an Aegon UK complaints officer said: “I’m sorry to learn that you’re unhappy we’ve advised you the client is unable to change his mind and now take tax-free cash from his pension, because it’s already in payment and he’s outside of the cancellation period set by Aegon.”

Jeremy Phelps, chartered financial planner for Llanelli-based Financial Solutions Wales, said: “GARs often come with a lot of unknowns that you don’t expect or know about until you want to do something.”

Right to reply

An Aegon UK spokesman said: “We are currently looking at the complaint and are due to update the adviser on how we will proceed with this in the coming days.

“The adviser believes he was incorrectly informed about the ‘cooling-off’ period for his client’s guaranteed annuity rate.

“Our illustration pack which confirmed the product term states the cooling-off period ends 30 days from the date this is received.

“When the adviser called on 1 August he was incorrectly told the cooling-off period would last until later in the month.

“We believe that the information regarding his client’s product choice and the cooling-off period was clear, but are reviewing the case on the basis that he was subsequently provided with incorrect information over the phone.”