Defined Benefit  

Hargreaves to pay out over unsuitable DB transfer advice

He also noted that he had not seen any evidence of a discussion concerning Mr D’s attitude to risk or about the potential underlying investments that might have been suitable in this case.

Mr Lawrence said: “The costs and charges of such investments would have been important when comparing the costs of transferring against other options so I think that should also have been established. 

“And if Hargreaves Lansdown believed that Mr D needed to remain in cash until his situation was clearer – or he annuitised, then it’s not clear why it was in his best interests to transfer at that point in the first place.”

He concluded that Hargreaves Lansdown should have advised Mr D to postpone the DB transfer until he was certain he needed to draw a regular income and had an idea of what investments he would make with his Sipp.

Mr Lawrence said: “My view is that Mr D was more inclined to opt for a regular, guaranteed income. And so to bolster his other income, he could just as well have relied upon funds from the other Sipp he held, withdrawing the funds in entirety if needed under the pension freedoms, and maintained his guaranteed benefits within the scheme.”

He concluded Mr D had not been given all the information he needed to make an adequate comparison between the DB scheme and an annuity or drawdown option via a Sipp. 

Mr Lawrence therefore ordered Hargreaves Lansdown to put Mr D as close to the position he would be in now had it not advised him to transfer his DB pension.

It must also pay £250 for the distress and inconvenience caused.

amy.austin@ft.com

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