FOS Claims Upheld Against Troubled Adviser
Pi Financial Ltd

Changes in 2015 to how pensions could be accessed opened up the market to cold callers and unscrupulous so-called ‘advisers’, who saw an easy way of making money through the commissions they earned.

People were advised to leave solid, well-performing workplace pensions, which have ‘defined benefits’ such as death benefits for loved ones and a guaranteed level of income upon retirement based on the employee’s final salary.

They were encouraged to move their pension funds into a SIPP, a Self-Invested Personal Pension, which offers more flexibility in terms of the funds that can be invested in, and also how the money could be accessed at retirement.

It is fundamental that any financial advice given by an adviser should be in the best interests of the client. A detailed consideration of their attitude to risk must be carried out, which, in Mr H’s case, was ‘low medium’. Information should be gathered about the age at which they wish to retire, what their likely expenditure might be, as well as the cost of transferring a pension in terms of adviser fees and ongoing charges.

Initially, Mr H took his complaint directly to Pi Financial, saying that they owed him a duty of care and the advice he received was negligent. Pi Financial didn’t agree, and Mr H escalated his claim to the Financial Ombudsman Service (FOS).

FOS is a government-backed organisation that resolves complaints between financial businesses and their customers, including the authority to award compensation.

Mr H’s case was investigated fully, and an Ombudsman concluded that his complaint should be upheld. Given his circumstances, transferring Mr H’s defined benefit pension wasn’t the right thing to do.

The Ombudsman commented:

“There would be little point in Mr H giving up the guarantees available to him through his DB pension only to achieve, at best, the same level of benefits outside the scheme.”

Mr H may even have been worse off, given his low attitude to risk and the projected rate of return for this type of investor. In addition, he would have lost valuable death benefits, a guaranteed amount which would have been paid to his wife if he predeceased her.

Pi Financial was ordered to pay Mr H compensation for the unsuitable financial advice, to undertake a redress calculation, and to offer Mr H a cash lump sum payment, to be invested prudently for his retirement.

Sarah Spruce, Legal Director and Head of the Professional Negligence team, says:

“We are working with a number of clients who have claims with this firm. The large number of decisions against Pi Financial Ltd suggests there is a systemic problem with the advice they were giving.

I would urge anyone who has transferred out of their defined benefit pension or other investment, on the advice of Pi Financial or one of their appointed representatives, to get in touch with a member of my experienced financial mis-selling team. We can undertake a free, no-obligation assessment of your case, explore your options and see if you could have a claim for compensation.”