An ombudsman has ruled that Openwork was not being transparent about the commission a client was paying for his pension.
Ombudsman Benjamin Taylor ruled the client - referred to as Mr B - had clear and credible evidence about what he had been told by the IFA, and was adamant that he was verbally told he was only paying an 8.5 per cent upfront fee and nothing further.
An email exchange between the IFA and Mr B in 2015 supported this, as did an enquiry with the IFA in 2012 after he managed to log in and review his account.
The client had a pension fund of around £52,000 when he made the transfer.
The ombudsman said that on the balance of probabilities, Mr B only agreed to the 8.5 per cent fee up front and nothing else but he also paid another initial commission of 50 per cent of his first year’s regular contributions.
Mr Taylor added that even if he were to conclude Mr B should have been aware of the commission charges from the start, he would still uphold the complaint.
He said: "In making my decision, I’ve considered all the points raised by Openwork. But I have found Mr B’s evidence believable and credible. His account is not ‘hearsay’ as alleged by Openwork.
"I’ve concluded that Mr B had transferred in the belief that he was paying a single 8.5 per cent upfront fee and that he was sold an ongoing advice service to justify that significant level of commission.
"Had he been aware of the ongoing commission and that the service wasn’t going to be provided he wouldn’t, on the balance of probabilities, have gone on to agree to transfer his pension."
Mr Taylor said it was disingenuous for the IFA to suggest there was no trail commission on Mr B's pension and while it might not be trail commission in the traditional sense, he was continuing to pay commission every time he increased his contributions, which were originally intended to be every year.
ruth.gillbe@ft.com
