A drawn out pension transfer process by Fairstone led to a client losing £55,000 when he tried to transfer the value of his former occupational scheme to a new self-invested personal pension (SIPP).
The client, referred to as ‘Mr B’ by the Financial Ombudsman Service (FOS), complained after his transfer value quotation dropped by some £55,000 when the advice firm took three months to go through the pension transfer process.
On 13 September 2016, Mr B received a transfer value quotation of £541,980. This amount was guaranteed until 13 December 2016, after which it would be recalculated.
The transfer could only go ahead if the pension scheme administrator had received all the correctly completed paperwork within three months. However, the administrator did not receive the paperwork until 14 December – one day after the guaranteed value had expired.
Mr B’s new transfer value was quoted at £486,908 – £55,072 less than the original transfer amount quoted.
Timeline
Seven days after being given his original transfer quotation, Mr B had a meeting with Fairstone, and informed them that the transfer had to be completed by 13 December, or it would be recalculated and would probably have a lower value.
On 10 October, Mr B chased Fairstone as he had not heard anything. On 13 October, Fairstone wrote to Mr B, and on 27 October, Mr B signed the required forms.
A couple of weeks later, on 10 November, Mr B contacted Fairstone to find out what was happening. Six days after that, a meeting was arranged between an adviser and Mr B, but the adviser couldn’t make the date. The meeting was arranged twice more because the adviser couldn’t make it, and in the end, the adviser promised to call Mr B on 2 December, which they failed to do.
In the meantime, on 29 November, a pension transfer analysis report was produced by external consultants. The report then had to be looked at by Fairstone’s compliance unit.
On 5 December, Fairstone told Mr B the papers were still with the compliance team.
A day later, the proposed transfer was approved by the compliance team. Then, on Friday 9 December, Mr B had a meeting with Fairstone and all the transfer paperwork was signed.
The paperwork was then sent to the SIPP administrator to be signed by them by recorded delivery. The paperwork arrived at the SIPP administrator on Monday 12 December, just one day before the deadline.
The SIPP administrator then completed the forms and sent them to the scheme administrator, ultimately resulting in them arriving on 14 December, a day late.
‘No evidence of urgency’
Mr B complained to FOS it was the fault of Fairstone that his transfer had not taken place before the guaranteed period expired. The adjudicator agreed, but Fairstone did not.
The case was passed to ombudsman Adrian Hudson, who upheld the complaint. He said he saw no evidence in Fairstone’s emails that explained the urgency of the situation.
He said there was “more than sufficient time” to complete the transaction, and Fairstone should have explained the urgency of having a meeting so that the transaction could be completed before the guarantee ran out.
Hudson said Fairstone should have also explained the urgency with the SIPP administrator and asked that the forms be sent by guaranteed next day delivery or even by courier to the administrator. If this had been the case, he believed the papers would have reached the administrator in time, and Mr B would have received a higher transfer value.
Hudson said Fairstone should pay the difference in transfer value to Mr B, plus investment growth, and compensate Mr B £300 for the distress and inconvenience he suffered.