Delayed annuity recommendation costs Jelf £108k

Delayed annuity recommendation costs Jelf £108k

Jelf Financial Planning has been told to pay one of its clients £108,000 after an ombudsman upheld a complaint about his Sipp.

The client - known only as Mr T - complained because he was advised to transfer his pension fund into a Sipp.

Mr T’s adviser then moved to Jelf and he signed a servicing agreement with the company against the background of falling markets.

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By September 2008 the Sipp was worth significantly less than when Mr T turned 65 just a year earlier.

Ombudsman Terry Connor said Mr T should have been advised by Jelf to purchase an annuity in September 2008 when it began to advise him, rather than in 2012 when this recommendation was eventually made.

He said: “Given the significance of Mr T’s pension benefits it was not suitable to leave his fund exposed to investment risk.

“Ideally such advice should have been given to Mr T by the first firm. But as Jelf had the opportunity to advise an annuity when it became Mr T’s adviser in 2008 it is in my view responsible for part of Mr T’s losses for not buying an annuity until 2012.

“Had the risks of leaving his fund invested been fully explained I consider he would have accepted advice to buy an annuity in September 2008.”

Jelf said the liability for the overall loss should be shared and that only the losses due to Mr T not buying an annuity after they became his advisers were their responsibility.

The original firm the adviser worked for upheld the complaint about the initial advice and agreed Mr T should have been advised to buy an annuity at age 65.

Mr Connor said Jelf should pay Mr T £108,499.73 plus simple interest at 8 per cent a year from 1 May 2013.

He said this would put Mr T in the position he would be in now but for Jelf’s error.

Jelf has also been told to pay Mr T £250 for the trouble and upset caused.