Adviser told to refund fee due to inconsistency

Adviser told to refund fee due to inconsistency

Mazars Financial Planning has been ordered to pay back part of a client’s advice fee as information provided about the charge was deemed inconsistent.

In a Financial Ombudsman Service (Fos) decision, a client of Mazars Financial Planning complained he was given misleading information about the fees Mazars Financial Planning would charge for giving DB transfer advice.

He also complained that the advice he received didn’t make it clear how he would be better off by transferring out of his defined benefit scheme.

The Fos upheld his complaint in regard to inconsistent fees but said that the advice he received was reasonable.

The individual, who the Fos called Mr M, approached Mazars Financial Planning for advice about this pension in February 2017.

He had received a capital equivalent transfer value of £1.07m on his defined benefit pension and wanted advice on whether to transfer out.

Mazars gave him advice to transfer his pension into a Sipp.

In April 2017, Mr M questioned some of the charges set out in a report sent by Mazars Financial Planning about transferring his pension.

Shortly after, Mr M confirmed that he would not be going ahead with the transfer as he felt that 32 and a half years of final salary entitlement was too much to give up for a self-invested personal pension (Sipp).

In May 2017, Mazars Financial Planning sent Mr M a fee note charging him £5,700 including VAT, which Mr M paid.

Following this, Mr M complained to the firm that the advice had been unsuitable and that its fees were misleading. 

Mazars Financial Planning rejected the complaint about its advice but admitted that some of the wording used in the report regarding advice charges wasn’t as clear as it could have been.

Therefore, the firm offered Mr M a refund of £1,200 on the advice fee.

Mr M did not accept this and chose to refer his complaint to the Fos.

The Fos adjudicator initially thought the complaint should succeed as the charges on the Sipp were high and it wasn’t suitable advice to transfer into a product with excessive charges.

She said if the transfer had happened and Mr M had complained about this, his complaint would have been upheld.

But, Mazars Financial Planning argued that the fixed charge was small considering the size of the DB transfer value and that its charges were competitive compared with the rest of the industry.

Ombudsman Doug Mansell found that the report from Mazars Financial Planning stated that the firm had agreed to charge a fixed fee of £4,750 for its initial advice. This was exclusive of VAT but may be subject to VAT at the standard rate.

The report stated: “Please note that in the event of you not proceeding with our recommendations or termination of these instructions at any time, we will account you for all our time costs incurred up to that date. This fee may be subject to VAT at the standard rate.”