Defined Benefit  

Appointed rep to pay redress for principal firm error

Appointed rep to pay redress for principal firm error

An appointed representative firm has been told by the Pensions Ombudsman that it is liable for redress owed to a customer of its principal firm, which went bust in the meantime.

In February, pension ombudsman Anthony Arter upheld Ms D's complaint against Halebarns Financial Planning. She complained a delay in transferring her defined benefit pension to a personal plan with Royal London meant she received a transfer £25,321 lower than the original cash equivalent transfer value.

The process, which the Ombudsman considered to constitute maladministration from the adviser firm, was conducted by the IFA Partnership, an appointed representative of Halebarns Financial Planning. 

At the time, principal firm Halebarns was told by the Ombudsman to confirm with Royal London the sum required to put Ms D in the same position as if the original transfer value of £415,106 had been paid into her chosen investment, rather than the £389,785 transferred.

Halebarns Financial Planning, as principal with responsibility for the compliance of its appointed representatives, should have paid the amount within 14 days of receiving the cost from Royal London.

Instead, in a second complaint to the ombusdsman, Ms D said she didn’t receive the appropriate redress from the principal firm, which was formally dissolved on April 11, 2019.

On further investigation, Ms D has said that she was introduced to the IFA Partnership on the basis the firm was an independent financial adviser with the correct experience and qualifications to deal with her type of final salary pension.

All of her correspondence was with the appointed representative firm and not with Halebarns Financial Planning.

“She has had no dealings with the Halebarns Financial Planning and she finds it astonishing that IFA Partnership, having been found to be at error in this matter, is now in effect blaming Halebarns Financial Planning for the situation which it had caused,” the second complaint decision stated.

The appointed representative firm told the Pension Ombudsman that it has nothing to do with the claim and that the matter should be referred to Halebarns Financial Planning’s liquidator.

The liquidator told the ombudsman officials that Ms D would rank as an unsecured creditor in the liquidation, and that there was no planned payments to any class of creditor.

After a further review of the facts, Mr Arter found that because of the maladministration committed by IFA Partnership it is equally liable, together with Halebarns Financial Planning, and should pay the redress originally due to Ms D.

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