An adviser has helped his client claw back more than £320,500 in compensation after he questioned pension advice given by St James’s Place.
Dennis Hall, chartered financial planner at Yellowtail Financial Planning, recommended his client to complain to SJP as he was unsure the pensions advice given was appropriate, in particular that the lifetime allowance was not taken into account.
Hall sent a draft complaint letter to the client on April 12, 2019 for them to sign and send to SJP, which they did within a few days.
It detailed how the client was advised by SJP to fund personal pensions rather than topping up existing benefits within the NHS Pension Scheme, of which the client was already a member.
The client took out three separate personal pensions and then switched these into a single retirement account with SJP.
Hall said the client had a number of annual reviews but the question as to whether the client should contribute to a personal pensions plan or to his workplace pension was not raised.
By doing this, the client ended up having lifetime allowance issues.
In a letter dated November 6, 2020, 19 months after the initial approach, SJP apologised for the time taken to deal with the client’s complaint.
The firm said it had taken into account the benefits the client could have received through his employer’s pension scheme and compared it to the value of the client's SJP plans, while also considering the impact of the lifetime allowance.
SJP calculated there was a loss of £312,528 as at July 1, 2020.
Simple interest at 8 per cent was then added for the period from July to November 6, 2020.
In total, after taking tax into account, £319,524 was offered in recognition of the net loss the client made by contributing to the SJP plans.
The firm also offered a payment of £1,000 for the inconvenience caused by the time it took to resolve the matter.
This took the total compensation to £320,524.
Hall said: “Advising someone to contribute to a personal pension rather than topping up an existing occupational scheme is as detrimental as advising them to opt out of the scheme.
“There have been rules around this for a long time and this should have been picked up years ago.
“Our fee for assisting with this claim was time based rather than a contingent fee and was under £4,000 including VAT.
“That compares extremely well compared to a typical claims management company working on a contingent basis for around 30 per cent of the compensation, which would have been closer to £100,000.”
An SJP spokesperson said: "We take our client satisfaction very seriously and regret any occasion where we get things wrong. We do our very best to resolve all complaints quickly and correctly.”
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