The Pensions Ombudsman has reported St James's Place Wealth Management to the Financial Conduct Authority over failings in handling a client's pension funds.
In a complaint upheld in March the ombudsman found SJP had lost units in a client's pension plan when it was transferred into a small self-administered scheme (Ssas), but could not offer any explanation as to how this had happened.
In October 2017 the client requested his pension plan, which consisted of four policies, be transferred to a Ssas with Hartley due to "poor administration and other issues".
This transfer was completed in November 2017 but the client soon after requested a financial record of the transactions carried out prior to the transfer, which the ombudsman heard he had chased SJP for on several occasions.
In January 2018 the client approached the ombudsman claiming SJP had failed to provide a record of redemption of funds, prices and dates and he therefore did not know whether SJP had carried out the transfer correctly and was "concerned that it might have acted in error".
The client said his complaint had two factors, the first being a "minor" query regarding a £1.90 difference between the pre-transfer quotation and the sum actually transferred and which SJP responded to in April 2018 when it attributed the amount to the automatic rounding of numbers during the transfer process.
But the client maintained his "main" issue lay with the difference in units between four funds in one of his policies, a query he had asked SJP about on three occasions over the course of seven months.
In September 2018 SJP contacted the ombudsman and admitted an error on its part had led to a difference in the funds, and the sum transferred from the pension plan to the Ssas should have been about £650 higher.
The adjudicator in the case suggested SJP should reimburse the client the difference between the number of units he bought in the Ssas with the sum actually transferred, and the number of units he would have bought with the sum that should have been transferred.
He also asked SJP provide the client with further information in relation to the transfer, in order for him to ascertain the transfer was carried out correctly and pay £500 in compensation in respect of "non-financial injustice".
Whilst SJP accepted the adjudicator's decision the client remained concerned about the "accuracy of the record keeping of SJP" over the lifetime of the policies, given the "number of units they managed to ‘lose’ in the only five day period I checked their accuracy in 16 years of holding the investments".
The adjudicator therefore contacted SJP and asked it to provide transaction histories for the four policies from inception to date of transfer out, but in response the advice company said it could not provide all the information stating it was "unable to trace exactly why the error occurred" and offered the client further compensation.
Despite the adjudicator thinking this offer was reasonable, the client argued: "SJP's system administers hundreds if not thousands of millions of funds under management.
"For them to just say 'we lost some units and we don't know how' is completely inadequate.
"I think their system or administration of the system is noncompliant and they need to determine how the units were lost."
The case was therefore escalated to the ombudsman at the service, who upheld the complaint and increased the compensation to £1,000 as an "appropriate" award given SJP were not "immediately forthcoming" in addressing the client's concerns.
Both the adjudicator and the ombudsman expressed concerns that SJP might have operated, and is still operating, "inadequate systems, which make it difficult or impossible for it and scheme members to identify any lost units".
The ombudsman said: "I can usually only consider whether there has been any harm to the individual who has come to us with a pensions issue.
"There are exceptions, for example if money has been paid out of a pension scheme in breach of trust at a loss to the scheme.
"However, I cannot make trustees, managers, employers or scheme administrators change their general working practices, although, I can report such failings to the appropriate regulator. I find that the client's complaint falls under this category."
The ombudsman said if SJP were operating inadequate systems it would be for the regulator to take "any further appropriate action" and he confirmed he would send a copy of his decision to the FCA.
An SJP spokesperson said: "St. James’s Place has robust systems with appropriate controls in place and we take client satisfaction very seriously.
"This was an isolated incident and we regret any occasion where an error results in a correction being required."
rachel.addison@ft.com
