The Financial Ombudsman Service has upheld a complaint against Quilter Financial Services Ltd after it took adviser charges after being told ongoing advice was not needed.
The complainant, identified in the Fos's ruling as Mrs B, alleged that adviser charges totalling £5972.42 were taken from her self invested personal pension after she informed Quilter she no longer required ongoing advice.
In August 2018, Mrs B had transferred her defined benefit pension into a Sipp, the value of which was about £1.2mn in 2020, managed on a discretionary basis by Quilter.
There were also annual advisory reviews, charged at 0.25 per cent of the portfolio, with an adviser that is now part of Quilter.
In August 2021, during discussions with Quilter, Mrs B asked for the ongoing advice service to be cancelled.
After her instruction, further fees of £1,292 and £4,679 were deducted in October 2021 and April 2022.
As the payments were made in advance for services yet to be provided, Quilter offered Mrs B £5,509 compensation in cash in July 2022.
This allowed for 20 per cent tax relief on paying as much of the compensation back into the Sipp as possible, and a 15 per cent reduction to the remainder to allow for the future tax treatment of funds that couldn’t otherwise be paid into the pension.
Although investments had already been cashed in to meet the over collected charges, Quilter also calculated that Mrs B was better off at the time of its offer because the markets had fallen.
As a goodwill gesture it made no further downward adjustment to the amount offered and added £300 for the distress and inconvenience she suffered.
However, Mrs B informed the ombudsman that she had not accepted Quilter’s offer and so had not received this money.
She remained unhappy about the assumption made that she will pay some of the compensation back into her Sipp, resulting in a reduction for tax relief.
This was because she didn't feel she had enough support from Quilter on how to get the payment into her pension.
She sought a full refund of the over collected fee, plus a reconsideration of the compensation for distress caused.
Investigator findings
An investigator at the ombudsman asked Mrs B if she intended to use part of the redress to pay one year’s maximum contribution to her Sipp.
Referring to the additional paperwork being involved she felt this was too difficult, and probably would not do it.
As a result, the investigator thought Mrs B’s complaint should be upheld because the right tax adjustment was to reduce the total fees by 15 per cent.
However, Quilter disagreed with the investigator and maintained that its offer best ensured that Mrs B was placed back into the position she would have been in, had the money remained in her pension.
Quilter stated, as its offer was fair and reasonable at the time it was made, it didn’t consider it was obliged to recalculate if the position with any investment loss had changed.
Ombudsman ruling
Ombudsman Gideon Moore ruled that it was "clearly a mistake" for Quilter not to cancel the ongoing fee arrangement, but acknowledged that, on being made aware of its mistake, it made proposals to put this right.
Mrs B didn’t agree with those proposals made by Quilter and brought them to the Fos, but this "hasn’t resulted" in more compensation, he said.
As Quilter didn’t take into account that Mrs B was already over her lifetime allowance, the ombudsman ruled that it would be fair for Quilter to pay her slightly less and reduce the payment by 20 per cent.
The ombudsman stated that they didn’t think this was evidence of Quilter treating Mrs B in a high handed manner or being unwilling to put matters right.
"Mrs B had a choice whether to accept Quilter’s original offer or ask this service to look into it, with no guarantee that the amount on the table would remain the same," Moore stated.
The ombudsman said he understood Mrs B’s strength of feeling about what would have happened if she’d not questioned the payment, but that this was a matter of speculation.
"It doesn’t alter that Mrs B now has an award from this service for her financial loss which puts her back into the position she would have been in, but for Quilter’s mistake," the ombudsman said.
The ombudsman therefore ruled that it would uphold Mrs B’s complaint and required Quilter Financial Services Ltd to pay her back the fees it wrongly deducted from her pension.
These fees should be reduced by 20 per cent to allow for future income tax that would otherwise have been paid when these sums were withdrawn from the pension as income.
It also ruled that Quilter should pay Mrs B the £300 compensation it had already offered for distress and inconvenience.
A spokesperson from Quilter said: “As stated in the Fos decision, we accept that we made an error in taking advice fees in this case and we promptly looked to put the situation right as soon as it was brought to our attention.”
tom.dunstan@ft.com
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