An advice firm must pay £100 in compensation despite giving suitable pensions and investment advice.
A client, referred to as Ms M, complained to the Financial Ombudsman Service that the advice she received from David Stock & Company Ltd to take her pension in 2011 was unsuitable.
In 2011, Ms M was working and a member of her employer’s pension scheme.
She also had three other personal pension policies.
David Stock & Company advised her to take benefits from one pension using its guaranteed annuity rate.
For the other two policies, the business advised Ms M to take the benefits by utilising the open market option.
The pensions were taken using a provider offering the best annuity rates at the time.
Ms M argued she didn’t know it was an option to leave the pension benefits where they were and the adviser knew she would continue working for a few years.
Ms M also complained that in 2013, when she had recently sold a property and was holding the proceeds in a deposit account, she was given unsuitable investment advice.
She was looking to invest some of this money and was assessed as being prepared to take a cautious degree of risk.
Ms M’s main concern was that the business failed to ensure her investments fully utilised her annual Isa allowance.
In a final decision, ombudsman Doug Mansell said the tax ramifications were discussed.
Mr Mansell said: “Whether it would have been better to wait would have largely been a matter of speculation. By taking her benefits in 2011, Ms M was able to crystallise these at a time when investment returns seemed favourable.
“If she’d waited, there was the possibility the fund values could go down. Also, while she would have been older, there was no guarantee annuity rates would be higher. I understand they have in fact reduced more recently.
“So overall I don’t think it was unreasonable to advise Ms M to take her benefits in 2011. Although she’s had to pay tax on the income, I’ve not seen evidence this has placed her in a worse position than if she’d left the benefits until later date.”
The adviser’s letter in July 2013 noted it was not possible to allocate the full amount being invested into an Isa.
The adviser also recommended Ms M take advantage of the investment provider’s facility to switch funds into an Isa as each new tax year starts.
The business says Ms M chose not to use the facility to automatically switch the funds as she was already contributing to an Isa elsewhere.
The advice firm was told to pay Ms M £100 for the trouble and upset the failure to fully utilise the Isa allowance caused her.
