PensionsJul 31 2015

Ombudsman tells Hornbuckle to pay adviser fees

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Ombudsman tells Hornbuckle to pay adviser fees

The Pensions Ombudsman has upheld a complaint made against Hornbuckle and ordered it to pay a client’s professional fees incurred due to the provider’s “woefully inadequate” service, amounting to around £23,000.

Due to Hornbuckle’s “maladministration”, pensions ombudsman Anthony Arter told the self-invested personal pension provider to pay complainant’s Michael Williams’ tax consultancy fees (£10,434), Parkland Financial Advisors’ fees (£12,375) and compliancy consultancy fees (£257.11).

He added that if the total amount is disputed, it should be enforced through the county court.

Mr Williams had three flexible income drawdown arrangements in his Sipp plan; the first arrangement started on 24 September 2008 and the other two started on 20 September 2009.

On 10 February 2009, Hornbuckle informed Parkland that the maximum yearly pension available to Mr Williams was £537,835.

The following month the IFA emailed Hornbuckle requesting it to pay this income as soon as possible so it was paid into the 2008/09 tax year and to also make an income payment as early on into the next tax year as possible.

On 10 March 2009, Hornbuckle paid £537,835 and again on 28 April 2009, meaning two payments were paid into Mr William’s pension within the same pension year (24/08 to 23/09). Together they exceeded the recalculated income for that year of £540,156 which resulted in an overpayment.

Four years later, Hornbuckle reviewed the drawdown payments and identified the overpayments into all Mr William’s pensions.

In October 2013, Hornbuckle wrote to the IFA, requesting that the full amount be repaid “with immediate effect” or the overpayment would be treated as an unauthorised payment and subject to tax liabilities.

After much to-ing and fro-ing between the IFA and Hornbuckle, on 14 February 2014, Parkland wrote to Hornbuckle stating that they had made an unauthorised payment and they had not carried out their fiduciary duty to ensure the payment was being made correctly. However, Hornbuckle disputed this.

Mr Williams then went to the ombudsman complaining that Hornbuckle made a number of errors with the administration of his pension, which resulted in unauthorised payments totalling £537,357 and the potential additional tax liability for him.

He also said he had paid a number of professional costs for re-opening his tax returns for the five-year period to deal with this matter.

Hornbuckle maintained to the ombudsman that it was not wholly responsible for the overpayment. However, Mr Arter said that in his view, Hornbuckle had committed maladministration by not informing the IFA that to make the further April 2009 payment would have penal tax implications.

Therefore Hornbuckle is liable to cover any additional tax liabilities as a result of the over payment.

As well as Hornbuckle paying Mr Williams professional costs, Mr Arter ordered the provider to pay £300 for the “distress and inconvenience caused” as well as refund £1,000 of fees he had paid the provider to administer his pension.

donia.o’loughlin@ft.com