In 2003 the client, referred to as Mr W, met a Sesame adviser to review his pensions and the benefits he would get from a plan he set up in 1978.
At this time, Mr W was paying £600 a month into the plan and intended to retire in 2017.
According to Mr W, the adviser said his existing plan included a guaranteed annuity rate (GAR) of 9.7 per cent, and was advised to keep the plan because it had “extremely valuable” income guarantees.
However, enquiries made by Mr W to the pension provider in 2014 revealed the explanation Sesame had given did not reflect the way his plan actually worked because it didn’t have a GAR.
Mr W thought this meant his plan was worth a lot less and that he had missed an opportunity to increase his contributions.
He subsequently complained to Sesame, which said however there was no evidence its adviser gave him advice between 2003 and 2011.
But Sesame did offer him £300 for the time it took to reply to his complaint.
A Fos adjudicator said Sesame had clearly looked into Mr W’s pension because there were a number of references to it in his files, and said it was unlikely no advice had been given.
The adjudicator said it should have been clear to the adviser that Mr W’s policy did not include a GAR, and instead offered a guaranteed basic annuity (GBA).
However, despite the wrong explanation about how his pension worked, the adjudicator didn’t think this meant Mr W’s policy was any less valuable.
In response to this, Mr W accepted if the plan was properly explained, he would still have been told to continue the plan.
However, he disagreed with the adjudicator’s assessment because he felt that Sesame had failed in its duty when providing him with advice.
He also argued had the plan been properly explained to him, he would have increased his contributions, and therefore wanted to be put back to the position he would have been had correct advice been given.
But an ombudsman who reviewed the case upheld the earlier Fos adjudicator’s decision, and said while it is clear the explanation Mr W received about how his plan worked was incorrect, he didn’t think the advice to continue payments and simply take income was unsuitable.
“Even if Mr W was given the correct plan explanation, I don’t believe he would have been any less optimistic about growth in the years before retirement,” the ombudsman said. “Therefore I don’t think he would have acted differently by making additional contributions.
“Sesame has acknowledged delays in it answering Mr W’s complaint and has offered to pay him £300. In the circumstances, I think this is reasonable given the trouble and upset caused to Mr W.”
This Fos ruling came after last month FTAdviser reported the Financial Ombudsman Service partly upheld a complaint against TenetConnect Limited about advice relating to guarantees included in a client’s pension.
TenetConnect was ordered by the Fos to pay the client, also named as Mr W, a sum of £250 in respect of the trouble and upset caused.
In his assessment, ombudsman Abdul Hafez said it was clear the explanation the client received from the TenetConnect adviser about how his plan worked was incorrect in 2013.
katherine.denham@ft.com
