Harbour Rock / Portafina Client Awarded Compensation for Unsuitable Pension Transfer Advice

In June 2021, Mr B was a cautious investor, 61 years old, single, with no financial dependants. His pension was worth just over £36,000 and included a final bonus payment. He had £12,000 in savings, no debts and wanted to access his retirement benefits when he reached 67.

Portafina/Harbour Rock recommended that Mr B switch to a Self-Invested Personal Pension (also known as a SIPP). SIPPs can offer a flexible retirement investment method, allowing access to different fund types.

Mr B was advised to invest in a particular portfolio (Parmenion SIPP) through a Discretionary Fund Manager who would manage the funds on Mr B’s behalf.

Mr B was told this arrangement would offer him better service, transparency, flexibility and peace of mind. He was also promised lower charges and access to his existing pension’s final bonus, worth some £20,000.

In addition to an initial advice fee of over £1000, Mr B was told he would pay almost 1.5% annually for ongoing management and platform fees (around £500 annually, based on the then-current transfer value).

Mr B accepted the advice and went ahead with the switch but complained to Portafina/Harbour Rock two years later. His claim for unsuitable advice was rejected, so Mr B escalated his complaint to the Financial Ombudsman Service.

The Financial Ombudsman Service (FOS) investigation was in two parts, an initial review and decision by a FOS Investigator, and a final decision by an Ombudsman.

The FOS Investigator agreed with Mr B’s complaint, saying that Mr B’s circumstances and needs didn’t warrant a Discretionary Fund Manager. The additional fees incurred were likely to eat into his modest pension fund and he did not need the added flexibility that the new SIPP offered. Indeed, the new fund was far higher up the risk scale than was appropriate for Mr B’s needs, leading the Investigator to conclude that Mr B’s existing pension fund would have been sufficient.

Portafina/Harbour Rock disagreed, and the case was sent to an Ombudsman for a final decision. The Ombudsman agreed with the Investigator and ordered that Mr B be compensated fairly, based on a comparison of Mr B’s current investment value with the notional value of his previous pension had he remained in that scheme. If the current value is less than the notional value, compensation would be due, plus interest. Mr B was also awarded £350 for the trouble and upset caused to him by the unsuitable financial advice.

Self-Invested Personal Pension (SIPP) mis-selling can be the result of:

• Investing in funds that are unsuitable for your needs, e.g. they are higher risk or have excessive charges/fees
• Your financial adviser failing to properly inform you of the reasons for changing your investments
• The value of your SIPP pension falling, despite assurances from your adviser that it would increase

If you think you have been mis-sold a SIPP, you can complain to the SIPP provider or financial adviser directly. If you disagree with their decision, you can take your claim to the Financial Ombudsman Service for independent adjudication.

If your financial adviser or SIPP provider has gone out of business, it may still be possible to make a claim through the Financial Services Compensation Scheme (FSCS), a lifeboat scheme that can award compensation of up to £85,000.

Sarah Spruce, Partner and Head of the Professional Negligence team at TLW Solicitors, says:

“SIPPs can offer increased flexibility in terms of the number and type of investments you can enter into, but they are not suitable for everyone. People’s circumstances are all different, from their age and income, their appetite for risk, to their lifestyle and retirement plans. Anyone considering transferring an existing pension to a SIPP should seek a second opinion. Unfortunately, we have seen time and time again that unsuspecting investors are persuaded to move their pension pot into funds that aren’t right for their needs, costing them more in fees, exposing them to more risk than they are comfortable with, and often resulting in loss of funds.

Our team is experienced in taking claims to FOS and the FSCS, helping you navigate the complex legal and financial jargon and keeping the momentum going. Contact us for a no-obligation chat and explore your options.”

TLW Solicitors are specialists in SIPP mis-selling and pension transfer mis-selling cases. Our claims team will assess your case and decide whether we can assist you on a no-win, no-fee basis. If we proceed with your claim, and the case is unsuccessful for any reason, you will not be charged for the work that we have done.