The Financial Ombudsman Service (Fos) has told Positive Solutions to pay up after it failed to transfer a client’s whole pension fund when she bought an annuity.
Positive Solutions should have ensured that the client – known as Mrs B – knew that she needed to take an annuity in order to achieve her stated aim of taking all her benefits.
Ombudsman Alison Cribbs intervened after the client became “confused” about her position.
Ms Cribbs ruled that Positive Solutions should have made it clearer as to how Mrs B should have achieved her goal of taking all her benefits, after part of it was transferred back to a previous insurance company.
The decision notice stated: “There is some uncertainty as to why the protected rights fund was returned. Positive Solutions says that it was only returned as it was too small to utilise the open market option.”
The ombudsman was not persuaded, in particular noting that correspondence from the adviser to Mrs B in March 2012 indicated that the adviser thought it necessary to return the fund in order for Mrs B to pursue her complaint.
Ms Cribbs said: “In any event, when the fund was returned, I consider that Positive Solutions should have ensured that Mrs B knew that she needed to take an annuity in order to achieve her stated aim of taking all her benefits.
“I have not seen any evidence that it did so.”
In March 2012, Mrs B planned to start drawing an income from her pension, but the insurance company overstated the value of her protected rights fund. After complaining, the total fund was paid to another company to buy a lifetime annuity and release tax-free cash.
The adviser arranged for the second company to return the protected rights fund to the first and for Mrs B to return the tax-free cash lump sum element of the protected rights fund.
When, in September 2014, the first company wrote to Mrs B to advise her of the sum that remained with it, Mrs B was confused, as she believed the whole fund had been transferred in 2012.
She complained that the first insurer had not correctly acted on her instructions in 2012, but it replied that it had acted on the instructions it had received. Mrs B then complained to Positive Solutions that she had been mis-advised in 2012.
Ms Cribbs ruled that Positive Solutions should establish the net annuity that Mrs B should have received from the protected rights fund had the purchase not been cancelled.
Positive Solutions was also told to pay her £200 for the trouble and upset caused.