The Pensions Ombudsman has ruled in favour of Standard Life after an investor complained the commission on his self-invested personal pension (SIPP) was not properly explained to him.
The case has since been referred to the Financial Ombudsman Service (FOS) and then to the Financial Services Compensation Scheme (FSCS) as it also contained complaints against the investor's adviser.
The complainant, referred to in the ombudsman's notes as Mr King, applied for a Standard Life SIPP in March 2008.
King signed a declaration in his application stating that he agreed to its terms and conditions and agreed to his adviser receiving commission.
The form allowed King to choose between a funded initial commission, paid monthly from the SIPP for six years; an initial commission, paid in a single payment at the start of the plan; or a fund-based renewal commission, paid throughout the life of the SIPP.
However, King did not select a specific option for how his adviser should receive commission on his application form.
Instead, his IFA had written "permission as per enclosed illustration" across the top of the relevant page of King's application form.
This attached illustration included a paragraph explaining that the funded initial commission arrangement would be used, using a rate of 0.4% per year.
King claimed his IFA did not explain this commission arrangement with him, and said if he had been told about it, he would have selected the initial commission option.
The complainant also said Standard Life failed to properly explain the commission arrangement to him.
He said he was unaware the provider would charge him an extra 0.2% for every 1% of commission paid to the IFA, and said that if he had known this, he would have chosen the initial commission option.
Standard Life said it had issued a key features illustration explaining the commission arrangement to King, which King denied receiving.
It added it was the responsibility of the IFA to arrange the commission structure with King.
Earlier this month the Pensions Ombudsman ruled that Standard Life had provided adequate information about the SIPP.
The ombudsman added that discussing commission arrangements was the responsibility of the IFA, who fell outside the pension watchdog's remit.
However, the ombudsman said the complaints against the IFA had been referred to the FOS and the FSCS since King's initial complaint against Standard Life.
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