DRN-6287827

The complaint Mrs G complains about the pension transfer advice she received from Thompson Cavendish Ltd (‘TCL’). She questions the suitability of the advice she received, she says she felt rushed into things and the fees weren’t made clear. What happened The details of this complaint are well known to both parties, so I won’t repeat everything here. The following is a summary of the background leading up to the complaint to provide some context. Mrs G made contact with TCL in February 2024, having been referred to them by a friend. She says she hadn’t reviewed her existing pension for many years and wanted some advice about whether she needed to do anything. Following a meeting in March 2024, TCL recommended Mrs G switch her existing personal pension policies (the higher value one invested 100% in a With-Profits fund and the other lower value one invested 50/50 in With-Profits and a Managed fund) to a different provider. In a suitability report of 15 March 2024, TCL said the reason for the transfer was because the two existing pensions did not have any of the benefits associated with drawdown or flexible death benefits. Having assessed Mrs G’s attitude to risk as ‘Medium’, it recommended she invest her pension monies in a spread of 11 equity and bond-based investment funds, which comprised its ‘Growth Portfolio.’ Mrs G also signed up to TCL’s ongoing advice service at an annual cost of 0.5% a year. This primarily offered Mrs G an annual review of her circumstances and investments to ensure its ongoing suitability. On 15 October 2024, Mrs G complained to TCL. She said she didn’t feel she had been advised well and asked for a return of the fees she’d paid so she could cease the relationship and move to another adviser. She said she felt rushed into signing, she didn’t understand the fees, and she didn’t feel it had properly understood and considered her needs and her objectives. She said she was worried as a result and felt unable to work with TCL as her adviser going forward. TCL said it was disappointed to receive Mrs G’s complaint. In summary it said it didn’t believe it had done anything wrong – it explained the fee structure, it didn’t think things had been rushed, it explained the pros and cons of drawdown versus taking an annuity, and explained flexible death benefits. It said Mrs G was happy to proceed. It said it hoped Mrs G would change her mind and it looked forward to continuing the relationship. Mrs G responded saying she didn’t feet TCL had addressed her concerns. She said the

-- 1 of 9 --

advice she was seeking was to understand what she had and if she could retire with no worries. She said she didn’t feel she could continue the relationship and asked how to escalate her complaint. TCL issued a further response. It essentially disagreed that its advice was unsuitable. It said Mrs G wanted to review her existing plans making them work harder – at no time did she ask about understanding whether the recommendation would mean she could retire with no worries or if she (and her husband) needed to continue working. It said it proposed to stop the ongoing advice fees and recommended Mrs G ask her new adviser to carry out a change of agency to take over the servicing of her plan. Dissatisfied with its response, Mrs G brought her complaint to us. I issued my provisional decision of 24 March 2026, explaining that I intended to uphold this complaint because I thought the pension switch advice Mrs G received was unsuitable. I’ve included the relevant extracts of my provisional decision here as they form part of my final decision. Copy of provisional decision What I’ve provisionally decided – and why I’ve considered all the available evidence and arguments to decide what’s fair and reasonable in the circumstances of this complaint. I’ve taken into account relevant law and regulations, regulatory rules, guidance and standards, codes of practice, and (where appropriate) what I consider to have been good industry practice at the relevant time. And where the evidence is incomplete or inconclusive I’ve reached my decision based on the balance of probabilities – in other words, on what I think is more likely than not to have happened, given the available evidence and wider circumstances. As a regulated firm, TCL had many rules and principles that they needed to adhere to when providing advice to Mrs G. And these can be found in the Financial Conduct Authority (FCA) handbook under the Conduct of Business Sourcebook (COBS) and Principles for Businesses (PRIN) as they were at the time of the advice. In 2009 the Financial Services Authority (now FCA) published a checklist following its earlier report about pension switching, that is still applicable today. That checklist identified four main areas where consumers had lost out: • They had been switched to a pension that is more expensive than their existing one(s) or a stakeholder pension (because of exit penalties and/or initial costs and ongoing costs) without good reason. • They had lost benefits in the pension switch without good reason. This could include the loss of ongoing contributions from an employer, a guaranteed annuity rate (GAR) or the right to take benefits at an earlier than normal retirement age. • They had switched into a pension that did not match their recorded attitude to risk (ATR) and personal circumstances.

-- 2 of 9 --

• They had switched into a pension where there is a need for ongoing investment reviews but this was not explained, offered or put in place. Later on, as part of wider guidance in April 2012, the regulator revisited the suitability of replacement business. Amongst other things, it found that some businesses were: • Failing to consider the impact and suitability of additional charges, either by not considering the costs of the existing scheme or not making a comparison of those with the new one in a way the client was likely to understand. • Recommending switches based on improved performance prospects but providing no supporting evidence to show that these performance prospects were likely to be achieved. • Failing to collect adequate information on the existing investment or to consider the features and funds available within the existing scheme. Having considered all of this and the evidence in this case, I intend to uphold this complaint because I don’t think the pension switch advice Mrs G received was suitable or in her best interests. I’ll explain why. Looking at the 2009 checklist in this case, while I’ve seen no evidence that Mrs G gave up any guaranteed benefits as a result of transferring her pensions, the new pension was more expensive. According to the suitability report, Mrs G’s existing plans were costing her 1.28% and 1% each year respectively. Mrs G’s new pension had a total cost of 1.62% a year based on the illustration provided (the suitability report said 1.5%, but the illustration accounted for the actual fund charges of the chosen investment portfolio.) And this included TCL’s ongoing advice fee of 0.5% a year. So, was there good reason for the transfer to outweigh this extra cost? It appears from the suitability report that the primary reason for the transfer was because Mrs G’s existing pension plans did not offer flexibility – they didn’t offer the ability to take benefits via drawdown or provide flexible death benefits. The fact-find recorded Mrs G’s only objective was to consolidate her pension into a more flexible one offering more than an annuity. But it’s not clear from the advice paperwork how TCL determined Mrs G had a need for flexibility such that transferring to a more flexible arrangement was in her best interests at this time. In my view, one of the primary factors to help determine a need for flexibility would be to understand Mrs G’s retirement needs, including crucially her income and capital needs. Looking at the relevant section in the fact-find, it simply said: “As much as possible” at age 70-75. And I think this suggests Mrs G’s needs in retirement were not properly and thoroughly explored or interrogated. And TCL’s own testimony show this was the case. It told us there was never a discussion about an analysis of income in retirement – this would happen at a later stage if required. And it said, Mrs G never asked for this – the only objective was to move away from her existing provider because they didn’t offer drawdown. But I think it should have carried out this assessment – simply recording “as much as possible” is, in my view, somewhat rudimentary. So, because TCL did not know what income Mrs G needed to support her intended lifestyle, or determine what, if any, capital requirements she might need, I can’t see how TCL could reasonably determine Mrs G needed flexibility of arrangements and so demonstrate the

-- 3 of 9 --

advice to switch her pension plans to a more flexible one was suitable and in her best interests at the time. I accept Mrs G might not yet have known what income and/or capital sums she might need in retirement. But if this was the case, then I don’t think TCL should have recommended the transfer just because her existing plans didn’t offer drawdown. I think it should have waited until Mrs G’s retirement needs and objectives were more certain, or until it properly understood them, so it could give suitable advice. TCL has provided a copy of some handwritten notes the adviser appears to have made during the meeting with Mrs G. Looking at these, it indicates there was a discussion about the difference between an annuity and drawdown. But there’s nothing more here or any further detail to show why Mrs G needed flexibility and why an annuity – a guaranteed income with no risk – wouldn’t meet Mrs G’s future income needs for example. I think this is particularly relevant in this case given Mrs G’s recorded intended retirement age of 70-75, as in general terms, an annuity provides a higher level of income with increased age. That said, I’m not entirely persuaded TCL properly explored Mrs G’s intended retirement age. The reference to 75, in my view, seems to have been assumed based on the normal retirement age of Mrs G’s existing plans (written to age 75) rather than based on an in-depth discussion about it. And I would have expected there to have been a discussion about it and for this to have been clearly reflected in the advice paperwork. An expected retirement age of 70 or older, in my view, is quite late. So, I would have expected TCL to have challenged how realistic this was and documented more on this point. Without understanding Mrs G’s future income need, TCL also didn’t understand whether her existing pensions were likely on track to deliver the income she needed. There’s nothing to show that TCL carried out any research on and considered the performance of Mrs G’s existing plans. It didn’t, for example, determine they were performing poorly or below the required growth potential she needed to meet her needs, such that Mrs G might have been better off by transferring, thus demonstrating it was in her best interests. Had TCL properly explored this, it’s entirely possible that Mrs G’s existing plans might have been on track to deliver what she needed. In which case, rather than recommend a transfer, TCL might simply have needed to reassure Mrs G that her existing arrangements were suitable at this time. And on the topic of performance, I also note TCL doesn’t appear to have produced an illustration of Mrs G’s existing plans alongside the new pension illustration it did produce. I think it ought to have done to compare the future growth potential based on the same retirement age to show the impact of the charges. Because it didn’t, I don’t think Mrs G was able to make an informed decision about things. Turning to TCL’s assessment of Mrs G’s attitude to risk – it determined she was a ‘Medium’ risk investor. But again, if TCL didn’t understand Mrs G’s income and capital needs in retirement and whether her fund was on track to deliver this (or if not what any shortfall was) I can’t see it was reasonably in a position to understand and help Mrs G determine the level of risk she was comfortable, willing and/or needed to take to achieve her objectives. It’s entirely possible that the current approach and risk level of Mrs G’s existing plans (in my view reasonably considered to be of a combined lower risk approach than Medium risk) were appropriate and suitable – she might not have needed to take on a greater level of risk overall to achieve things. As such, I’m not persuaded Mrs G’s attitude to risk was properly considered given the above identified gaps in the advice given. So, I don’t think it can be shown that adopting a Medium risk approach was suitable or appropriate for Mrs G at this

-- 4 of 9 --

time. I’ve also considered that, while the new pension Mrs G transferred to was more expensive, part of the additional cost was for ongoing advice. So, was this good reason to transfer – would Mrs G benefit from ongoing advice at this time? I don’t think it was a good enough reason. Because I’ve found that TCL did not properly explore and truly understand Mrs G’s retirement needs, I’m not persuaded the extra cost was justified in this particular case. As I referred to above, it’s entirely possible that Mrs G’s existing pensions were on track to meet her needs, in which case there would be no need for ongoing advice at this stage. Without a better understanding of Mrs G’s goals and objectives, I can’t see the potential benefit of ongoing advice outweighed the additional cost for Mrs G at this time. So, taking all of the above into account, I’m not persuaded the pension switch advice was suitable or in Mrs G’s best interests. Ultimately, I’m not persuaded it can be shown that TCL properly and sufficiently understood Mrs G’s retirement plans to justify transferring at this time. If once Mrs G’s retirement plans were properly determined and/or known, then a transfer could be considered if flexibility was a genuine need. Switching purely because Mrs G’s existing arrangement did not provide pension freedom flexible benefits, including more flexible death benefits, – which it seems was the only rationale – is not, in my view, sufficient reason on its own to demonstrate switching was in Mrs G’s best interests. I’d add that there’s also nothing here to indicate that Mrs G asked for a more flexible plan. Although even if she did, it was TCL’s role to advise Mrs G on what was in her best interests – not simply give her what she thought she needed. I’ve considered the fact that Mrs G approached TCL for advice wanting to review her pension. Does this mean Mrs G would have switched regardless? I’m not persuaded it does. I don’t think this means Mrs G was set on moving away from her existing provider such that she would have insisted on transferring in any event. I’ve seen no evidence that Mrs G was an experienced investor or otherwise possessed the requisite skill, knowledge and confidence to make her own investment / pension decisions and go against the professional advice she was seeking. So, I think if TCL had given suitable advice – that is, she should retain her pension – then I think Mrs G would have followed that advice. So, I intend to uphold this complaint. In relation to the ongoing advice fees, the investigator concluded that Mrs G should receive a refund of the ongoing advice fees she paid after she made it clear that her relationship with TCL had ended and no ongoing advice was needed going forward. But the calculation I have set out below already takes into account that, if suitable advice had been given, Mrs G would not have paid ongoing advice fees – she would have retained her existing plans. So, there’s no separate refund due. Mrs G has raised a number of other complaint points about the fees charged and that she felt rushed into agreeing to the transfer. But given I’ve found the advice was unsuitable, I don’t need to consider these points further. Finally, I think an award for distress and inconvenience is warranted here. This isn’t intended to fine or punish TCL. But when something’s gone wrong, I think it’s important to recognise the emotional and practical impact any failing might have had. And in this case, I think it is clear from Mrs G’s correspondence with TCL that she has been worried by the advice she received and its apparent this has had a detrimental impact on her.

-- 5 of 9 --

Making an award of this nature is not an exact science. But in the circumstances, I think an award of £200 is fair here. Responses to my provisional decision Mrs G said she was pleased with the outcome, but had a couple of points to make. She said if her plan hasn’t lost value since the advice, TCL would only have to pay her £200 compensation. She said she is concerned that TCL took a large fee for the advice, which it isn’t expected to be returned. She said she understood the redress was designed to return her to her original position, but asked why TCL should keep the advice fee. She also asked if the compensation would be payable to her directly. TCL said it disagreed with my provisional decision. It said the main reason Mrs G moved her pension was that it did not offer drawdown and the new one did. It said it didn’t have a conversation with Mrs G about her income needs at retirement – it didn’t seem relevant at that time and could have been discussed at a later stage. It repeated that flexibility was the key driver for the transfer and why Mrs G decided to move her pension – it had nothing to do with a discussion about her finances at retirement. What I’ve decided – and why I’ve considered all the available evidence and arguments to decide what’s fair and reasonable in the circumstances of this complaint. Having done so, and considered the responses to my provisional decision, I’ve not been persuaded to change my mind. So, I’ve reached the same conclusion, and for the same reasons, as I set out in my provisional decision. Firstly – the points TCL has made in response to my provisional decision, in my view, only serve to support and strengthen my reasons for upholding this complaint. The only rationale given for transferring Mrs G’s pension was because her existing plan did not offer drawdown. And as I’ve explained, switching purely for this reason, and to a more expensive plan, is not, in my view, sufficient reason to demonstrate it was in Mrs G’s best interests. TCL’s role was to advise Mrs G on what was in her best interests having properly explored her retirement needs. And TCL did not do that. So, I remain of the view that it cannot be shown that TCL properly and sufficiently understood Mrs G’s retirement needs to justify transferring at this time. I don’t think the advice was suitable. I can understand Mrs G’s concern that she has paid TCL a fee for what I have deemed was unsuitable advice. But the fee will be taken into account in the redress methodology I’ve set out below. Mrs G paid TCL’s initial advice fee by deduction from her investment rather than paying it separately. So, no separate calculation is required for the fees here. So, if the calculation shows Mrs G hasn’t suffered a loss despite the unsuitable advice, then a payment of £200 for the distress and inconvenience caused will represent fair compensation. And as to how any compensation should be paid, I’ve explained this below. Putting things right – fair compensation My aim is that Mrs G should be put as closely as possible into the position she would probably now be in if she had been given suitable advice. I think Mrs G would have remained with her previous provider, however I cannot be certain that a value will be obtainable for what the previous policies would have been worth. I’m satisfied what I have set out below is fair and reasonable, taking this into account and given Mrs G's circumstances and objectives when she invested.

-- 6 of 9 --

What must TCL do? To compensate Mrs G fairly, TCL must: • Compare the performance of Mrs G's investments with the notional value if they had remained with the previous provider. If the actual value is greater than the notional value, no compensation is payable. If the notional value is greater than the actual value, there is a loss and compensation is payable. • TCL should also add any interest set out below to the compensation payable. • If there is a loss, TCL should pay into Mrs G's pension plan to increase its value by the amount of the compensation and any interest. The amount paid should allow for the effect of charges and any available tax relief. Compensation should not be paid into the pension plan if it would conflict with any existing protection or allowance. • If TCL is unable to pay the compensation into Mrs G's pension plan, it should pay that amount direct to her. But had it been possible to pay into the plan, it would have provided a taxable income. So, the compensation should be reduced to notionally allow for any income tax that would otherwise have been paid. This is an adjustment to ensure the compensation is a fair amount - it isn’t a payment of tax to HMRC, so Mrs G won’t be able to reclaim any of the reduction after compensation is paid. • The notional allowance should be calculated using Mrs G's actual or expected marginal rate of tax at her selected retirement age. • It’s reasonable to assume that Mrs G is likely to be a basic rate taxpayer at the selected retirement age, so the reduction would equal 20%. However, if Mrs G would have been able to take a tax free lump sum, the reduction should be applied to 75% of the compensation, resulting in an overall reduction of 15%. • Pay Mrs G £200 for the distress and inconvenience caused as I’ve explained. • Provide Mrs G with details of the redress calculation in a clear, simple format. Income tax may be payable on any interest paid. If TCL deducts income tax from the interest, it should tell Mrs G how much has been taken off. TCL should give Mrs G a tax deduction certificate in respect of interest if Mrs G asks for one, so she can reclaim the tax on interest from HM Revenue & Customs if appropriate. Portfolio name Status Benchmark From ("start date") To ("end date") Additional interest Mrs G's pension Still exists and liquid Notional values from previous provider Date of investment Date of my final decision Not applicable Actual value This means the actual amount payable from the investment at the end date.

-- 7 of 9 --

Notional Value This is the value of Mrs G's investments had they remained with the previous provider until the end date. TCL should request that the previous provider calculate this value. Any additional sum paid into the Mrs G's pension should be added to the notional value calculation from the point in time when it was actually paid in. Any withdrawal from the Mrs G's pension should be deducted from the notional value calculation at the point it was actually paid so it ceases to accrue any return in the calculation from that point on. If there is a large number of regular payments, to keep calculations simpler, I’ll accept if TCL totals all those payments and deducts that figure at the end to determine the notional value instead of deducting periodically. If the previous provider is unable to calculate a notional value, TCL will need to determine a fair value for Mrs G's investment instead, using this benchmark: For half the investment: FTSE UK Private Investors Income Total Return Index; for the other half: average rate from fixed rate bonds. The adjustments above also apply to the calculation of a fair value using the benchmark, which is then used instead of the notional value in the calculation of compensation. TCL must pay the compensation within 28 calendar days of the date on which we tell it Mrs G accepts my final decision. If TCL fails to pay the compensation by this date, it should pay 8% simple interest per year on the loss, for the period following the deadline to the date of settlement. Why is this remedy suitable? I’ve chosen this method of compensation because: • Mrs G wanted Capital growth with a small risk to her capital. • If the previous provider is unable to calculate a notional value, then I consider the measure below is appropriate. • The average rate for the fixed rate bonds would be a fair measure for someone who wanted to achieve a reasonable return without risk to her capital. • The FTSE UK Private Investors Income Total Return index (prior to 1 March 2017, the FTSE WMA Stock Market Income total return index) is made up of a range of indices with different asset classes, mainly UK equities and government bonds. It’s a fair measure for someone who was prepared to take some risk to get a higher return. • I consider that Mrs G's risk profile was in between, in the sense that she was prepared to take a small level of risk to attain her investment objectives in line with her existing investment approach. So, the 50/50 combination would reasonably put Mrs G into that position. It does not mean that Mrs G would have invested 50% of her money in a fixed rate bond and 50% in some kind of index tracker investment. Rather, I consider this a reasonable compromise that broadly reflects the sort of return Mrs G could have obtained from investments suited to her objective and risk attitude.

-- 8 of 9 --

My final decision For the reasons above, I’ve decided to uphold this complaint, and I instruct Thompson Cavendish Ltd to put things right in line with the approach above. Under the rules of the Financial Ombudsman Service, I’m required to ask Mrs G to accept or reject my decision before 12 May 2026. Paul Featherstone Ombudsman

-- 9 of 9 --