Argent Wealth Ordered To Pay £160,000 For Unsuitable Pension Advice
Argent Wealth have be
en ordered to pay £160,000 to a British Steel Worker following unsuitable pension transfer advice.
In March 2016 British Steel announced that it was looking at restructuring the business, a path which would eventually separate the British Steel pension Scheme (BSPS) from the rest of the company.
The complainant, a 56 year-old unmarried man with no dependants, was concerned that his pension fund was close to being in deficit and therefore would be moved to the Pension Protection Fund (PPF), and so he sought advice from Argent Wealth regarding his pension options in July 2016.
His personal circumstances were recorded in the transfer questionnaire –
He was in good health and there was no reason to believe that he wouldn’t reach normal life expectancy.
He had a mortgage of £58,000 against a home worth £150,000.
He had a £3,000 loan and £2,500 savings.
He was earning £2,000 net a month with approximately £1,400 of expenditure – his disposable income was therefore £600 a month.
His BSPS benefits had accrued over 38 years of service and he had a ‘cautious’ attitude to risk.
The complainant received a Cash Equivalent Transfer Value (CETV) from the BSPS for his deferred benefits of £251,530.
A Transfer Value analysis calculated that the amount the transferred funds would need to grow to match those being relinquished in the scheme by the time the complainant retired aged 65 was a substantial 14.3% each year.
Despite these figures, Argent recommended that he transferred out of the BSPS defined benefit pension scheme and into a flexi-drawdown pension policy.
The fee to complete the transfer analysis was £7,546 which would be deducted by the product provider from the CETV as a ‘product facilitated adviser charge’. There was also a further ongoing advice fee of 1% of the fund value that would be charged.
The complainant accepted the recommendation and transferred his British Steel pension.
The complainant argued the transfer was ‘not in his best interests’ and that Argent had ‘failed to consider the regulatory requirements in place when the advice was given’. He added that he would like to be ‘placed in the same position as if suitable advice had been given’.
Argent tried to dismiss the complaint in the first instance on the basis that although it agreed that the value of the transferred benefits was unlikely to be matched by the new scheme, the complainant had been made ‘fully aware’ of this and that there were ‘other key drivers’ behind his decision to transfer.
The Ombudsman Philip Miller concluded that the advice to transfer did indeed constitute ‘unsuitable advice’ and requested that Argent pay the complainant compensation up to a maximum of £160,000 and added that interest should also be paid on the sum.
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