Fees  

Adviser to refund fee after failing to provide ongoing services

Adviser to refund fee after failing to provide ongoing services

An adviser must return nearly £800 in fees after it failed to provide its client with any service on his pension.

The Financial Ombudsman Service found adviser firm Old Mill Financial Planning failed to meet the requirements for ongoing services, as set out by the regulator, so must pay back any fees charged to its client.

The client, who the Fos called Mr C, complained that between December 2015 and November 2016, Old Mill had not provided him with any services but had charged £764 in fees.

He had checked with his pension scheme but found Old Mill had not accessed his account at any point during this period.

Therefore Mr C demanded a refund from the adviser as he believed they had not done any work to merit the charges.

Old Mill argued Mr C had signed an agreement in November 2015 which said there would be an ongoing advice cost of 0.5 per cent of assets invested in the scheme.

Mr C had then signed an adviser charges form to allow Old Mill to receive payment from his pension scheme. 

Old Mill then advised Mr C on a pension transfer in November 2015, in which a one of £600 fee was paid.

The adviser argued Mr C’s complaint was invalid as he had signed a letter of engagement agreeing to pay the £600 implementation fee as well as the ongoing fee of 0.5 per cent.

It offered to pay Mr C £382 as a goodwill gesture to resolve the complaint but Mr C did not accept.

Ombudsman Colette Bewley reviewed the terms as set out in the November 2015 agreement and found a fee of 0.5 per cent was payable for an ad hoc service available when Mr C requested it. 

She also found Old Mill would issue an annual investment summary and keep Mr C up to date on the value of all the investments held on his behalf as well as advising on any changes it believed were necessary.

Old Mill argued that although Mr C had not taken advantage of the ad hoc services, it was still entitled to receive the fees.

The Fos highlighted that the Financial Conduct Authority issued a factsheet (Factsheet 010) in September 2014 stating that ongoing adviser charges may only be levied where an ongoing advice is supplied. 

An example of this would be regularly reviewing the performance of a client’s investments. 

Therefore the Fos argued Old Mill should not have been making charges without providing a service for them.

Ms Bewley said: “Apart from dealing with the transfer of pension for which a fee of £600 was paid, I have seen no evidence to show that Mr C was contacted proactively during the 12 month period in question to provide any of the ongoing services set out in the client service provision. 

“I was of the view that Old Mill failed to meet the requirements for ongoing services set out by the regulator and had failed to meet its contractual commitments for the provision of service.”