Mattioli Woods has been ordered by the Financial Ombudsman Service to pay almost £22,000 to one of its clients, who was badly advised to take benefits from her pension funds and buy annuities.
Taylor Patterson - which was bought by Mattioli Woods in 2015 - advised Ms R to take benefits from two of her pensions in separate occasions in 2013.
Both times she was recommended to take the maximum tax free cash – 25 per cent – and use the balance of the fund to buy an enhanced life annuity.
The confidential retirement questionnaire completed as part of the advice process recorded Ms R’s attitude to investment risk as very cautious.
This was described as requiring a guaranteed income for life with no investment risk in retirement. It also recorded that she wanted to use the tax-free cash and income to pay down her mortgage.
But Ms R has also explained that her son paid the mortgage. She also paid an additional £400 a month, which was in effect an overpayment, as the payment due was just under £1,200 a month.
The records she provided showed these payments were being made before she took benefits from both of her pensions.
Due to this, ombudsman Simon Dibble considered Mattioli Woods shouldn’t have advised Ms R to access her pension tax free cash.
He said: “Ms R was already overpaying her mortgage at the time of the initial advice. And if she had a desire to make lump sum payments in addition to this, she had access to savings that she could have used before accessing her pensions.”
Mr Dibble also noted that Ms R was working at the time and it didn't appear she had any immediate intentions of retiring, with the advice resulting in “her paying higher rate income tax on income that she didn’t need”.
He added: “Given what she’s told our investigator, I’m not persuaded that she would have taken benefits from her pensions if she had been properly advised.”
The Fos decision released in July stated that Ms R had savings of approximately £15,000, besides her pensions, at the time of the advice.
After several discussions about the methodology which should be used to calculate compensation with the different parties, the ombudsman decided to put Ms R as close to the position she would be in now if she hadn’t been given unsuitable advice by MW.
Therefore, the Fos has ordered Mattioli Woods to pay Ms R the sum of £21,641.64, which should be paid into the client’s pension plan.
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