AJ Bell must compensate a client after a delay with her Lifetime ISA (Lisa) application meant that she could no longer open an account.
In a Financial Ombudsman Service (Fos) decision, pension provider AJ Bell was told to pay redress after a client complained that the firm had delayed her Lisa application which resulted in her exceeding the age limit to open an account.
The client, who the Fos called Mrs J, first applied for a Lisa in November 2017 but did not provide the correct identification information, so the request was not processed.
She applied again in March 2018 but there was another problem with the identification requirements which centred on a certified copy of Mrs J’s passport.
AJ Bell needed the person certifying her passport to sign a document and provide their name, occupation, address and phone number.
The person certifying stated their occupation was “investment banking” rather than “investment banker”.
AJ Bell failed to spell out precisely what the problem was to the client and by the time the issue was resolved Mrs J’s 40th birthday had passed and it was too late because to open a Lisa an individual must be between the ages of 18 and 39.
AJ Bell stated that it had done enough to make Mrs J aware of what was required but she disagreed and referred her complaint to the Fos.
The Fos found that AJ Bell was responsible for the delay as it failed to pinpoint to Mrs J what the problem was.
A Fos investigator suggested that the provider should compensate Mrs J on the basis of the potential loss of bonuses she would have benefitted from had she opened the Lisa account.
Mrs J would have most likely made the maximum Lisa contribution of £4,000 per year for the next ten years and so had potentially lost out on £10,000 in government bonuses.
The Fos also assumed that she would have left this money invested until aged 60 so the bonuses could be claimed in full.
Therefore, the Fos calculated that £8,250 would have to be paid to replicate Mrs J's potential position in 20 years’ time, however a 25 per cent reduction was made to account for other variables which could have impacted on this return, giving a final total of £6,000.
AJ Bell contested this stating there was never a guarantee that Mrs J would have been able to open a Lisa and that if she hadn’t delayed reapplying there would have been time to complete the application before she turned 40.
The firm offered to split liability and to pay £1,500 in compensation but Mrs J rejected this offer and claimed that her loss was “far greater”.
Ombudsman James Harris agreed that AJ Bell’s offer did not reflect the potential loss.
Mr Harris said: “I accept there were other hiccups along the way – not least Mrs J’s initial abandoned application.