In a recent Financial Ombudsman Service (FOS) decision[i], Mrs G’s complaint against Gerard Associates Limited (Gerard) in respect of unsuitable advice to transfer her defined benefits occupational pension scheme into a Qualified Recognised Overseas Pension Scheme (QROPS) scheme based in Malta, was upheld.
Background
Mrs G was advised to transfer her occupational pension into a QROPS by Gerard however, another business advised on the proposed QROPS scheme and underlying investments. Mrs G never met with a representative of Gerard yet still, Gerard determined that the transfer was suitable and matched her objectives.
FOS’s findings
In upholding the complaint, FOS recognised the following:-
- It would have been more appropriate for Mrs G to wait until retirement, which was only six years away, to make her transfer decision;
- Mrs G was a moderate risk taker and should not have been advised to place her pension in an overseas scheme;
- The yield required to make the transfer worthwhile was not reasonably achievable; and
- There was no material benefit to Mrs G, in transferring her final salary pension.
FOS highlighted important guidance issued by the Financial Conduct Authority under Conduct of Business Sourcebook (COBS) Rule 19.1.16[ii] in which it is stated that a firm such as Gerard ought to assume that the transfer, conversion or opt out of a defined benefit scheme will not be suitable for a retail client, such as Mrs G.
Decision
On the basis of all of the above, and the fact that Gerard knew that the transferred funds were bound for a QROPS investment even though they didn’t advise on the same, Mrs G’s complaint was upheld and she was awarded fair compensation by FOS.
[i] Ref: DRN9291941
[ii] https://www.handbook.fca.org.uk/handbook/COBS/19/1.html
