Lighthouse has been told to compensate a client after the advice firm missed the deadline to transfer out of a defined benefit (DB) scheme.
Mr L approached Lighthouse for advice about transferring his DB pension in 2017 but, three weeks before the guaranteed transfer date, the firm said it would not be able to make the transfer in time.
He then approached a new adviser who successfully transferred the pension into one of his existing pension plans, albeit at a higher cost than Lighthouse had quoted.
According to the Financial Ombudsman Service (FOS) Lighthouse accepted it was at fault and offered to pay Mr L £900 to compensate for his losses incurred during the delayed transfer.
Mr L did not accept this amount on the basis that it would not cover him for his investment losses or the additional fees charged by his new adviser. Instead, he quantified his losses at £2,370.47 and approached the FOS.
The financial ombudsman upheld Mr L’s view that Lighthouse did not take into account the full period for which Mr L had been denied access to his funds during the delay. However, it did not support the view that Mr L should be compensated for the higher fees charged by the second adviser.
“While I appreciate that Mr L had to go to another adviser to complete his transfer, I am not persuaded this could only have been done by an adviser charging considerably more than Lighthouse would have done,” an ombudsman representative said.
“I have not seen persuasive evidence to show that Mr L obtained competing quotes from other advisers or that the adviser he eventually chose gave an unequivocal guarantee to complete the transfer within a guaranteed timescale.”
The ombudsman concluded that he did not accept Mr L’s argument that he was forced to choose a higher cost adviser because they would “inevitably complete the transfer within a guaranteed timescale.”
Rejected higher offer
In response to the ombudsman’s findings Lighthouse offered to pay Mr L £2,038.59 but the client rejected this on the basis that it did not cover all his losses.
Lighthouse then withdrew its offer, arguing that Mr L had benefited from the delayed transfer due to price movements in various investments.
The ombudsman rejected this argument and instead asked Lighthouse to reinstate its offer of £2038.59 plus interest of 8% simple accrued from 21 November 2017 to 10 April 2019.
Lighthouse was also instructed to factor in any investment losses already paid to Mr L and allow for the effect of charges and any available tax relief in its compensation.
If the payment is made into Mr L’s pension plan, Lighthouse should deduct any income tax that would have otherwise been paid, the ombudsman concluded.