Intrinsic has been told to refund an adviser fee of £1,800 for advice that saw a client pay too much into his self-invested personal pension (Sipp).
The client claimed that the adviser’s mistake caused him both financial loss and inconvenience, and the Financial Ombudsman Service agreed.
In October 2014, the client, known as Mr E, took advice from his adviser at Intrinsic Wealth.
He had recently sold a property and wanted to invest as much as possible from the proceeds of that sale into his Sipp.
He had around £82,000 to invest and wanted to use his full tax allowance for the current tax year and the previous three tax years.
Mr E invested around £74,000 in his Sipp.
But, the advice he got from Intrinsic Wealth about how much he could pay in was incorrect.
His adviser had failed to take into account the contributions of £9,750 he had paid in the tax year 2011/2012, and hadn’t told him he could only get tax relief up to his annual income in the year of contribution (tax year 2014/2015), which he had exceeded.
Intrinsic Wealth admitted its error and apologised to Mr E and it agreed to refund its advice fee of £1,800 and to pay him £1,000 compensation as a gesture of goodwill.
Intrinsic said the product provider would be able to refund his overpaid contributions, if he asked.
But Mr E didn’t accept Intrinsic Wealth’s offer of settlement because, to summarise, he didn’t think it fairly reflected his financial loss and the trouble he had been put to.
He added that in May 2015 he had sold unit trusts held in his Isa to fund a deposit on another investment property.
He said had he been given correct advice, he either wouldn’t have had to sell around £13,000 of these because he would have had money left over from the sale, or he would have used the money from the sale to pay for the deposit on the investment property.
He said he could only reinvest his money in the Isa within the tax limits that applied each year.
Ombudsman Kim Parsons ruled on top of refunding the advice charge, that Intrinsic should pay the accountant’s costs as “to get his overpaid contributions back, and mitigate the impact of getting incorrect advice from Intrinsic Wealth, he had little choice but to use his accountant’s services.
“I think therefore it would be fair for Intrinsic Wealth to meet these costs, which appear to have been reasonably incurred in the circumstances.”
As well as having to pay back its adviser fee, Intrinsic must reimburse its client for the charge he had to pay his accountant of £420 including VAT, and pay him £2,000 compensation.
Intrinsic Wealth must also pay interest on this amount at the simple rate of 8 per cent a year from the date the client made his claim to the date it makes the payment.