Defined Benefit 

Adviser under fire for offering to arrange pension transfer

Adviser under fire for offering to arrange pension transfer

An adviser without pension transfer permissions has been told to compensate a client they offered to help switch to a scheme offering access to cash at age 55.

The client, referred to as Mr T, was a member of an occupational pension scheme but wanted to take his pension benefits at the age of 55.

But in July 2015 the occupational pension scheme administrators told him he couldn’t access his cash as his early retirement pension would be less than the guaranteed minimum pension (GMP).

The scheme administrators explained to him that, due to the requirement to provide the GMP, he would be unlikely to be able to take his benefits until age 57 and in order to achieve his aim of taking cash at age 55 Mr T needed to arrange a transfer.

Mr T then approached Lawson Financial Management (LFM) to arrange the transfer of his pension benefits to an alternative arrangement in August 2015.

New requirements relating to pension transfers had been introduced in June 2015 and after that time, all advice on defined benefit to defined contribution pension transfers had to be provided or checked by a pension transfer specialist.

LFM didn’t have the requisite permission to advise Mr T and the ombudsman ruled it should have known this when Mr T approached it for assistance, as it was a regulatory compliance issue.

The ombudsman ruled LFM should have been aware from the outset whether or not it had the required permissions to provide advice on a defined benefit transfer and it was because of the adviser’s error in initially agreeing to assist with the transfer advice that Mr T experienced several months’ worth of delays.

Mr T was eventually able to take benefits directly from his occupational pension scheme without transferring in February 2017 aged 56 and four months.

Ombudsman Alison Cribbs said: “In accepting the instruction to look into a transfer I’m persuaded that LFM should have understood that Mr T was relying on LFM to compete its work within a reasonable period of time.

“I think that if LFM had told Mr T up front that it wasn’t able to provide advice on the transfer, he would have found another firm prior to travelling abroad. And, if he’d done so, he might have been able to take his benefits earlier, as he had hoped to do.”

LFM was ordered to pay Mr T £250 compensation for the delays he experienced.

emma.hughes@ft.com

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