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Fos slates pension transfer of illiterate insistent client

Fos slates pension transfer of illiterate insistent client

Portal Financial Services was wrong to transfer the pension of an illiterate insistent client, the Financial Ombudsman Service (Fos) has ruled, as it cannot be assumed signed statements were fully understood.

Mrs W complained that Portal assured her she could take the tax-free cash lump sums without having to make transfers.

The decision notice explained she could not read or write and was reliant on verbal advice, meaning any signed written statements were not fully understood, according to ombudsman Adrian Hudson.

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An upheld complaint last year revealed that Portal had established Mrs W – an active member of her employer’s defined benefit scheme – would be worse off in retirement if she transferred from this scheme.

During a telephone conversation with Mrs W in 2012, Portal noted that Mrs W wanted to take cash to pay for home improvements.

She was aware the remaining pension would be unlikely to grow sufficiently to match the benefits she could receive from her pension – but she suffered from arthritis, osteoarthritis, rheumatoid arthritis and fibromyalgia, so felt she would not live beyond normal retirement age.

Portal wrote to her, recommending not to transfer, adding that if she wished to proceed, it would treat her as an insistent client. It provided an insistent customer form, which Mrs W signed.

She was confused by the letter however, still wishing to take the lump sums, with her manager helping to complete the forms, and the transfer was completed in 2013.

Fos stated that Portal knew that Mrs W could not read or write, placing greater onus on making sure she fully understood the implications of transferring.

Portal disagreed, stating it had afforded her increased care and adding it would not have been right to discriminate against Mrs W by refusing to handle the transfers because of her learning difficulties.

Mr Hudson upheld the complaint, directing Portal to carry out loss calculation using the methodology for the pension review, but using the latest assumptions for cases that fall outside the review.

Portal was also ordered to pay Mrs W £250 for the upset she would have suffered because it arranged the transfer.