An adviser has railed against a recent Financial Ombudsman Service decision which has ordered his firm to pay more than £1,000 towards an individual, with the adviser categorically stating the fees they received were for advice given by his previous adviser.
The final decision, seen by FTAdviser, ruled that advice firm IFS Financial Management should refund an £809.64 fund-based fee that it received from Skandia back to Mr S’s fund so that the value of the Skandia pension plan is the same as if the fee had not been removed.
Jeremy Miles, director of IFS, told the ombudsman that Fos should not look at the complaint as Mr S is not his client.
In 2012, Mr S complained to the Fos that IFS had taken accepted payments from his pension pot after he had told them that he did not want them to act as his adviser.
His previous adviser, a director of David Upshall Financial Management, had retired.
In May 2012 the director of David Upshall Financial Management wrote to Mr S stating that her clients had been transferred to IFS. IFS told the ombudsman it had merely entered into an agreement with DUFM to accept the clients.
DUFM is listed on the financial services register as ‘no longer authorised’.
Mr S wrote back to DUFM, replying that he did not wish for IFS to look after him, however in June 2012 IFS wrote to Mr S supplying contact details and a brief introduction to the firm.
Mr S explained he had asked for his portfolio not to be transferred and requested the return of it.
Mr Miles told FTAdviser the portfolio records were then destroyed.
Following this, Mr S became aware that IFS “received payments” which came out of his pension and complained to IFS.
Old Mutual, which took over Skandia, told the ombudsman a fund-based fee of £809.64 had been paid on 27 August 2012 and that the pension fund had been affected because units in the plan had been sold to make the payment to IFS.
Mr Miles told FTAdviser he believes that the fee, which he passed on to Mr S’s former adviser, is paid in arrears for advice that was already given.
However, as he no longer has Mr S’s records, he cannot prove this was the remuneration arrangement agreed upon.
When Mr Miles asked Old Mutual for Mr S’s policy information, Old Mutual refused.
A spokesperson for Old Mutual said: “Mr Miles has requested data relating to a specific customer. As Mr Miles is not the customer’s appointed adviser, we cannot discuss this customer-specific information with him.”
IFS told the ombudsman that the fee it received was paid to DUFM and that it had not retained any money paid to it from Mr S’s policies as that was under the “terms of the agreement between the two advice firms”.
The ombudsman stated: “I have no reason to doubt what they [IFS] said. But I don’t think IFS should decide how money is paid from Mr S’s pension. That is a matter between DUFM and Mr S.
“I appreciate that IFS feels that it only processed the payment. My conclusion is still that IFS received a payment that should not have been paid to IFS. It should therefore refund that payment to Mr S.”
IFS also argued that Mr S should make a complaint to DUFM, which was a “possibility” the ombudsman considered, the decision read.
The ombudsman ruled this out as Mr S did not complain about DUFM but about IFS, however Fos suggested IFS should reclaim the payment from DUFM.
The decision said that IFS felt that would be “stealing” from DUFM, however ombudsman Roy Milne wrote that the “only reason the payment was made to IFS was that the two businesses had a commercial agreement”.
IFS also came under fire from the ombudsman for writing to Mr S to claim a refund of the case fee it would have to pay to use the Financial Ombudsman Service.
Case fees are only payable after a business receives 25 cases in a year, so IFS would not have paid a case fee.
However, the ombudsman pointed out, that even if a case fee was applied, businesses are not allowed to reclaim them. As a consequence, the firm was ordered to pay £300 for Mr’s ‘distress’.
donia.o’loughlin@ft.com
