National financial advice firm Lighthouse has been ordered to pay £2,000 to a client to compensate him for delays that saw him miss the guarantee date for his pension transfer.
Despite the firm accepting its blame in the process, the Financial Ombudsman Service had to step in to determine the correct level of redress, as the parties didn’t reach an agreement.
Problems started after in 2017 Lighthouse agreed to arrange Mr L's defined benefit pension transfer.
Three days before the guaranteed transfer value expired the advice firm had to tell him it wouldn’t be able to meet the deadline.
Subsequently, Mr L approached a new adviser who successfully transferred the DB pension into one of his other existing pension plans.
He then complained to Lighthouse about its conduct and its failure to transfer his pension within the required timescales.
The firm accepted it had been at fault and offered a total compensation of £900.
However, Mr L felt the amount was insufficient as it did not account for the period of investment losses and, more importantly, did not compensate him for the additional fees charged by his new adviser, when compared to the fees he would have paid to Lighthouse.
The Fos adjudicator upheld Mr L’s complaint, agreeing that the calculation of investment losses was insufficient since it had not taken into account the full period for which Mr L had been denied access to his funds due to the delayed transfer.
However, the adjudicator did not believe that Lighthouse should compensate Mr L for the additional fees he had paid his new adviser.
This was ultimately because it was Mr L’s choice and he could have selected a cheaper alternative.
In Mr L’s original complaint to Lighthouse he quantified his losses as being £2,370.47. In response to the adjudicator’s assessment, Lighthouse offered to pay Mr L £2,038.59.
The figure assumed that Mr L's transfer was completed on November 21, 2017, and included 8 per cent simple interest which would have accrued from this date to April 10, 2018.
While the advice firm accepted the Fos's decision, Mr L still felt he should be compensated for the additional adviser fees, which was denied by Lighthouse.
The advice firm also considered that if the transfer had gone ahead as initially planned, and Mr L had invested in the funds that he had used in one of his examples to demonstrate the losses, he would now have been worse off.
In light of this, Lighthouse withdrew its offer of compensation and reverted back to the original amount, and an agreement was not reached.
Ombudsman Terry Connor sided with the adjudicator’s original decision, and ordered Lighthouse to reinstate its offer to Mr L of £2,038.59, as he also agreed that the firm was not responsible for paying the higher advice fees.
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