Delays in considering a client’s complaint have cost an adviser an £100 - even though the Financial Ombudsman Service threw out the gripe.
Aberdeen Wealth Management were not wrong to advise a farmer to take out a life insurance policy for inheritance tax (IHT) purposes, the ombudsman ruled.
The client, referrd to as Mr O, complained life insurance and placing the policy into a trust wasn’t a suitable recommendation as he did not have an inheritance tax liability as he was a farmer.
A Fos adjudicator said he was satisfied the policy had been sold to mitigate against an inheritance tax liability on the estate Mr O jointly held with his father.
This was evern though Aberdeen hadn’t been able to produce any information concerning what the adviser at its predecessor’s business had said to Mr O, and what was discussed overall.
Reviewing the case Tony Moss, ombudsman, said it was very unfortunate that there wass no documentation available about the crucial meeting with the adviser including what was said about inheritance tax liability, placing any policy in trust and any form of suitability letter.
Mr Moss said: “It is impossible to be certain as to what was said about Mr O’s likely IHT liability, the need for this policy and the benefit of placing the policy in trust.
“I don’t believe it would be fair or reasonable to simply conclude the adviser did something wrong.”
The ombudsman noted the application form for the life insurance policy stated Mr O had an IHT liability of £1.6m and his accountant signed to confirm the accuracy of these details.
The declaration stated: “For person and inheritance tax cover, when the proposed sum assured exceeds £1.25m, separate confirmation of the details given in Section A will be required from your accountant or solicitor.”
Mr O said it would not have been the accountant’s job to check the proposed level of cover or whether the adviser had investigated what relief was available.
But the ombudsman disagreed with this interpretation.
Mr Moss said: “It seems to me Mr O’s accountant should have been aware of whether his estate was likely to be subject to IHT, or if he wasn’t aware, it would not have been appropriate for him to sign a declaration effectively confirming a liability.
“If he had been in any doubt about the accuracy of the information, I believe he should have sought further information before agreeing to sign.
“This suggests to me either that Mr O did have an IHT liability at the time or that he thought he had one, or that his accountant believed this to be the case. In this context, I cannot fairly conclude that the adviser wrongly advised him to take out this policy.”
