PensionsDec 4 2015

Pension transfer delay costs Scottish Equitable £350

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Pension transfer delay costs Scottish Equitable £350

Scottish Equitable has been ordered by the Financial Ombusdman Service to compensate an adviser’s client for delays in transferring a pension to a self-invested personal pension.

In March 2012, the complainant, known as Mr M, had his financial adviser ask Scottish Equitable for retirement quotations.

The following month, the adviser returned a retirement instruction stating “no pension income is required and Mr [M] wants only to take his tax free lump sum”.

However Scottish Equitable wrote back to tell Mr M it was unable to settle the claim, arguing it had not got all the necessary documents, asking for proof of identity and for the client to select an option from the quotation.

Mr M sent a copy of his passport and chose the option listed as B, which was to receive tax-free cash with a pension. But he wrote next to the option that he wanted maximum tax-free cash and “nil pension”.

In May 2012, Scottish Equitable sent Mr M a benefit statement which showed he had a lump sum and an annual pension.

At this point the adviser called Scottish Equitable and said once again that Mr M did not want a pension and wanted to move to drawdown instead.

The adviser also complained that by sending the statement straight to the client, Scottish Equitable had excluded him from the process, which had led to the wrong settlement.

Scottish Equitable said it had acted on Mr M’s instructions and was not required to contact the adviser. However, the provider later did a u-turn and acknowledged it should have contacted the adviser and agreed to resettle the plan.

This was completed by September 2012, but Mr M decided he would complain again about the way he had been treated by Scottish Equitable and in October 2012 transferred his fund to a different provider.

An initial Fos adjudication ruled it was not reasonable for Scottish Equitable to have gone ahead without clarifying the instructions and if it had done so it would have avoided the delays and potential loss.

In a bid to apologise, Scottish Equitable had backdated the investment to 11 May 2012, when the drawdown plan was started and the fund growth achieved was that of the fund selected.

The adjudicator concluded that no further redress was needed for loss of investment return, but added they felt that the adviser was partly responsible for some of the delays.

But the adviser argued Scottish Equitable had several opportunities to prevent the delays and should pay Mr M £350 for his distress. As a result, the matter was referred to ombudsman Alison Cribbs.

She said: “I am not persuaded I can fairly hold Scottish Equitable responsible for the delay in transferring the plan to drawdown and onto his new provider.

“It took some time for Mr M to make arrangements to return the money paid to him and for (the adviser) to send the paperwork to Scottish Equitable. But I accept that Mr M has been caused trouble and upset. A payment of £350 is fair and reasonable.”