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Intrinsic under fire for pension transfer costs info

Intrinsic under fire for pension transfer costs info

Intrinsic must compensate a disgruntled client after failing to provide clear documentation on recommendations it made to transfer his existing pension into a new scheme.

The Financial Ombudsman Service published ordered Intrinsic Financial Services to pay a client, referred to as Mr M, £250 for the trouble and upset he endured in realising the advice to transfer his pension may have been unsuitable.

Intrinsic advised Mr M to transfer his three existing personal pensions with Aegon and Aviva to a self-invested personal pension (Sipp) with Aegon.

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Following the transfers and the adviser moving on, Mr M became concerned at the advice and the lack of supporting documentation, especially regarding the level of charges.

In a three-page final decision from the ombudsman Mr M said he also felt the fee agreement form, which was provided when he complained, did not contain his actual signature.

The ombudsman concluded Mr M had not been provided with the appropriate information to make an informed choice regarding his pension transfer.

Ombudsman Keith Taylor said while the adviser commented the additional costs 'will reduce the fund growth by a net 2.7 per cent per annum on your plan' they should have also offered projections to give Mr M a true reflection of the impact of costs on his possible fund at retirement.

Without projections, Mr Taylor said Mr M was not in a position to make an informed decision regarding the transfer.

Mr Taylor saidd: "Mr M was not provided with projections and in my opinion, without these, he would not have fully understood the full impact and extent of the higher charges on his pension in the long term. I think Mr M would have invested differently."

To compensate Mr M fairly, Intrinsic has been ordered to compare the performance of Mr M's investment with that of the benchmark and pay the difference between the fair value and the actual value of the investment, with interest.

However, if the actual value is greater than the fair value, then no compensation is payable.

Intrinsic Financial Services was asked to comment on the ombudsman's ruling but a spokesman said nobody was available.

aamina.zafar@ft.com