Financial Ombudsman Service 

Adviser sees 84 complaints upheld

Adviser sees 84 complaints upheld

The Financial Ombudsman Service (Fos) has received 128 complaints against advice firm Portafina, of which the overwhelming majority have been upheld.

The Fos said the majority of the claims related to advice on pension transfers but could not give a timeframe in which the advice was given.

Of the complaints it has received, the Fos has upheld 84 and 41 are still under investigation.

FTAdviser reported last week (14 September) that the ombudsman had ordered Portafina to pay compensation after giving unsuitable advice on a pension transfer to a client considered as an "insistent client".

In April the advice firm was found to have wrongly advised a man who was recommended to transfer his rebate-only personal pension to a Sipp.

Most recently, the Fos upheld a complaint made by a client referred to as Mrs G, who had been advised to transfer out of her occupational pension scheme and into a self invested personal pension (Sipp) holding assets in overseas property and solar energy.

As a result of the advice given to her in 2011, Mrs G said she was unable to withdraw benefits from her pension due to her funds being illiquid.

At the point of transfer, Mrs G’s pension had a value of just more than £253,000. The main reason for the transfer was that Mrs G wanted to be able to release funds ahead of her planned retirement in order to pay off debts and make home improvements.

It was recorded that the critical yield required on the transfer value to match the benefits that would otherwise have been paid from the occupational pension scheme was 8.7 per cent.

Following her complaint the ombudsman ordered the advice firm to pay at least £150,000 in compensation - the maximum amount the Fos can order - and return Mrs G to the position she would have been in had she not taken the unsuitable advice.

David Ashley, an ombudsman at the Fos, said: "Recommending that Mrs G opt out and then transfer out of her occupational pension scheme was clearly unsuitable advice.

"The adviser should have told Mrs G to remain a member of the scheme. This was Mrs G’s only pension provision and it was a significant amount of service that she had built up.

"Mrs G would likely have relied on it to provide an income through her retirement. Mrs G hadn’t got the capacity to accept the significant risks that the transaction presented. Effectively opting out of her occupational pension scheme and transferring the accrued benefits and then investing in funds that presented appreciable risks."

He added: "Mrs G has said that she was never told that transferring wasn’t a good idea. I’m satisfied that if the adviser had set out the disadvantages of opting out and transferring in understandable terms advised Mrs G to remain a member of her occupational pension scheme, it’s more likely than not that she would have accepted that as appropriate advice from a professional adviser and stayed in that scheme."