True Potential has been told it was wrong to recommend a client transfer two pension pots to its own pension and must pay for future advice from another adviser.
The client, referred to as Mr L, met with a representative of True Potential in April 2015 and was advised to transfer his stakeholder pension (with provider A) and his personal pension (with provider B) to a True Potential pension.
A total of around £134,000 was transferred to True Potential.
A Financial Ombudsman Service adjudicator said she found nothing to justify transferring two pensions, as one was a stakeholder pension, both offered low charges and were suitable for Mr L’s attitude to risk.
The pensions were transferred to a plan with True Potential which had higher charges and commission.
True Potential agreed with the adjudicator that it should compare the two pension pot values with the actual fund value of its plan at the date of settlement and if there was a loss then it should be added.
The intermediary was also willing to pay Mr L £250 for the trouble and upset caused, but the client then argued he needed more cash to pay for further advice.
He suggested that it would take about nine hours to provide Mr L with suitable advice and the advice would cost £195 per hour.
The adjudicator agreed that Mr L would need to take further advice and didn’t think £195 an hour was an unreasonable amount.
The Fos suggested True Potential should compensate Mr L for the cost of getting financial advice and assumed it would take about three hours to provide - putting the figure at an additional £585.
But True Potential didn’t agree to the additional cost towards the advice and Mr L’s representative didn’t agree with the number of hours it would take to conduct a suitability assessment.
In a final decision, ombudsman Keith Taylor said it was reasonable for Mr L to take further advice, as the advice to transfer was not necessary or suitable, adding it was fair that True Potential contribute towards the cost.
“I don’t think True Potential should pay as much as Mr L’s representative says,” read the final decision. “That is because I think Mr L probably would have looked to get some advice about his pension at some point.
“And any advice would have come at some cost to him and so isn’t wholly down to any poor advice True Potential may have given him. I can’t say what that advice may cost, but I think he is in a worse position now and that True Potential should make some contribution.
“I think a contribution of £585 is fair in these particular circumstances,” added Mr Taylor.
