Advice giant St. James’s Place has come under fire from the Financial Ombudsman Service (FOS) after it failed to correctly calculate the transfer value of a client’s pension funds following the cancellation of her investment.
Mrs M, as referred to by the FOS, previously held pension benefits with two providers and decided she wanted to consolidate those into a single plan. She sought advice from an SJP adviser and agreed to transfer her pension benefits with the advice giant in February 2018.
After becoming unhappy with SJP's service and reading about negative media stories, in which the restricted firm took a kicking from the national press - particularly from The Sunday Times - for the perks offered to its advisers for bringing more clients and assets to the business, Mrs M asked for information about her rights to cancel her investment.
The cancellation notice was sent to SJP within the required 30 days of the start of the investment and so met the necessary conditions to be effective. SJP accepted the instruction and set the wheels in motion on the following business day (5 March).
After deciding to cancel, Mrs M's previous pension schemes indicated that they would be unwilling to accept the return of her investments, so she arranged to open a new self-invested personal pension (SIPP) with a new provider the ombudsman named 'provider F'.
According to the FOS, the transfer could not be processed using an automated system that is used for many transfers and the letters that provider F sent to SJP failed at first to acknowledge this transfer was as a result of a cancellation, so those letters needed to be amended and resent. Ultimately, the FOS said SJP did not receive the correct instruction from provider F until 27 April.
As a result, the transfer was not completed until May, two months after the request had been made, causing a loss for the client. Mrs M also told the ombudsman she had to regularly chase SJP for updates. She said she lost out on investment returns that would have been realised had the transfer been completed in a "more timely manner".
Not fair for SJP to pay
A first adjudicator felt it was not fair to ask SJP to pay Mrs M compensation, and noted that SJP had offered her some compensation to ensure the money that was transferred to the SIPP was equal to the funds she transferred in from her previous pension schemes. As Mrs M did not agree, this was referred to an ombudsman.
The ombudsman also believed SJP acted in line with its terms when calculating the value of the funds it transferred to F following Mrs M's decision to cancel her investment.
The ombudsman said: "I don't think SJP was directly responsible for any unreasonable delays in the transfer of Mrs M's funds to [provider] F. But I do think that SJP's failure to process the switch to cash on the correct date, or at least explain to Mrs M that the switch had been delayed, has caused Mrs M a loss of expectation."
On behalf of Mrs M, her husband said he believed it had already been clearly set out why she had lost out.
After once more considering all the available evidence, a different ombudsman upheld part of Mrs M's complaint. They thought SJP's failure to process the switch to cash on the correct date, or at least explain to its client it had been delayed, had caused Mrs M a loss of expectation.
He asked SJP to pay Mrs M £633.41 in respect of the "disappointment" caused to her.
Professional Adviser has contacted SJP for comment.
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