An adviser has been told to compensate a client after delays caused his to accept a retirement income which did not meet his needs.
The client of Henderson Loggie Financial Services Limited, referred to as Mr H, had a deferred annuity but had to decide whether to accept the income it offered or transfer it to another provider.
If he wanted to transfer it, all relevant documents had to be completed before 6 April 2014 when Mr H, who was married, retired and had no dependants, would have been 65 years of age.
In February 2014 Mr H, who received £900 per month on state benefits and held £52,000 in cash, told Henderson Loggie that he wanted to know if he could improve his pension benefits.
But he was not advised to transfer his deferred annuity plan to income drawdown until May 2014, meaning the transfer was not allowed because the deadline had passed.
Henderson Loggie argued it was not Mr H’s financial adviser from the date of the first meeting and as he did not complete the relevant documentation until 9 May 2014 it wasn’t to blame for him missing out on a more suitable retirement income.
Ombudsman Terry Connor said there was no credible reason why Mr H would not have disclosed the deadline to Henderson Loggie at the February meeting.
Mr Connor said: "I do not accept Henderson Loggie’s assertion that its contractual relationship and by implication its regulatory obligations to Mr H, only began on 9 May with the completion of its documentation.
"Substantial further work was agreed to be undertaken by Henderson Loggie following the February meeting.
"It completed a detailed fact find and undertook to approach other pension providers to secure quotes for Mr H.
"I have concluded that Henderson Loggie were, from the February meeting onwards, effectively his financial adviser. He was entitled to rely on its advice."
Henderson Loggie was ordered to pay Mr H interest on the tax-free cash he received from his deferred annuity plan provider plus an income of £630.97 gross per year as well as £500 for the distress and inconvenience caused to him.
The deferred annuity plan included spouse’s benefits but Mr H said he did not wish to include such benefits with his pension.
Henderson Loggie obtained enhanced annuity illustrations from a number of providers and also looked at the possibility of income drawdown because Mr H did not expect to live for more than 10 years so he wanted to obtain as much of his pension as possible as a lump sum.
The firm recommended the transfer so Mr H could take the maximum tax-free cash and income.
After Mr H's was prevented from going ahead with the transfer, a complaint was made to the provider but nothing could be done.
The Financial Ombudsman Service ruled Henderson Loggie failed to understand the importance of the cut off date so by the time advice was given, it was too late to transfer.
emma.hughes@ft.com
