DRN-6288053

The complaint Mr G, via his representative, complains about the pension transfer advice he received from Thompson Cavendish Ltd (‘TCL’). He questions the suitability of the advice he received, he says he 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 only of the background leading up to the complaint to provide some context. Mr G made contact with TCL in June 2024, having been referred to it by his wife who had earlier received advice in relation to her pension. Mr G says he wanted TCL to review his existing pension and provide advice about whether he needed to do anything. Following a meeting the same month, TCL recommended Mr G switch his existing personal pension invested in a With-profits fund to a different provider. In a suitability report of 14 June 2024, TCL said the reason for the transfer was because Mr G’s existing pension did not have any of the benefits associated with drawdown or flexible death benefits. Having assessed Mr G’s attitude to risk as ‘Medium’, it recommended he invest his pension monies in a spread of 11 equity and bond-based investment funds comprising its ‘Growth Portfolio.’ Mr G also signed up to TCL’s ongoing advice service at an annual cost of 0.5% a year. This primarily offered Mr G an annual review of his circumstances and investments to ensure its ongoing suitability. On 15 October 2024, Mr G complained to TCL with his wife acting as his representative. He said he didn’t feel he had been advised well and asked for a return of the fees he’d paid so he could cease the relationship and move to another adviser. He said he felt rushed into signing, he didn’t understand the fees, and he didn’t feel TCL had properly understood and considered his objectives and needs. He said he was worried as a result and felt unable to work with TCL as his adviser going forward. TCL said it was disappointed to receive the 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 Mr G was happy to proceed. It said it hoped Mr G would change his mind and it looked forward to continuing the relationship. Mr G responded saying he didn’t feet TCL had addressed his concerns. He said the advice he was seeking was to understand what he had and if he could retire with no worries. He said he didn’t feel he could continue the relationship and asked how to escalate his complaint. TCL issued a further response. It essentially disagreed that its advice was unsuitable. It said

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Mr G wanted to review his existing plan making it work harder – at no time did he ask about understanding whether the recommendation would mean he could retire with no worries or if he needed to continue working. It said it proposed to stop the ongoing advice fees and recommended Mr G ask his new adviser to carry out a change of agency to take over the servicing of his plan. Dissatisfied with its response, Mr G brought his 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 Mr 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 my 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 Mr 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. • 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

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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 Mr G received was suitable or in his best interests. I’ll explain why. Looking at the 2009 checklist in this case, while I’ve seen no evidence that Mr G gave up any guaranteed benefits as a result of transferring his pension, the new pension was more expensive. According to the suitability report, Mr G’s existing plan cost 1.19% a year (annual management charge of 0.95% plus 0.24% services and costs charge.) Mr 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 Mr G’s existing pension plan did not offer flexibility – it didn’t offer the ability to take benefits via drawdown or provide flexible death benefits. The fact-find recorded Mr G’s objective was to consolidate his pension into a more flexible one. Putting aside the fact that Mr G only had one pension, so the term ‘consolidation’ is somewhat misleading here, it’s not clear from the advice paperwork how TCL determined Mr G had a need for flexibility. And so how transferring to a more flexible arrangement was in his best interests at this time. In my view, one of the primary factors to help determine whether flexibility was required would be to understand Mr G’s retirement needs including crucially his income and capital needs. Looking at the relevant section in the fact-find, it said: “We didn’t discuss this area as for the time being just wanted to consolidate.” And TCL has said this was the case – it told us there was never a discussion about an analysis of income in retirement as this would happen at a later stage if required. It also said Mr G never asked for this – the only objective was to move away from his existing provider because it didn’t offer drawdown. So, it’s clear that Mr G’s needs in retirement were not discussed or explored at all. It appears that because Mr G indicated he wanted to consolidate his pension into a more flexible arrangement, that’s what TCL gave him. But it was TCL’s role to advise Mr G on what was in his best interests – not simply give him what he thought he needed. TCL should have carried out a thorough assessment of Mr G’s retirement needs to determine if flexibility was needed. Because it didn’t do this and it didn’t know what income Mr G needed to support his intended lifestyle, or determine what, if any, capital requirements he might need, I can’t see how TCL could reasonably determine Mr G needed flexibility of arrangements, and therefore demonstrate the advice to switch his pension plan to a more flexible one was suitable and in his best interests at the time. I accept Mr G might not yet have known what income he might need in retirement. But if this was the case, then I don’t think TCL should have recommended the transfer just because his existing plan didn’t offer drawdown. I think it should have waited until Mr G’s retirement needs and objectives were more certain, or until it properly understood them, so it could give suitable advice.

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TCL has provided a copy of some handwritten notes the adviser appears to have made during the meeting with Mr 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 Mr G needed flexibility and why an annuity – a guaranteed income with no risk – wouldn’t meet Mr G’s future income needs for example. I think this is particularly relevant in this case given Mr 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 Mr G’s intended retirement age. The reference to 75, in my view, seems to have been assumed based on the normal retirement age of Mr G’s existing plan (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 plus, 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 Mr G’s future income need, TCL also didn’t understand whether his existing pension was likely on track to deliver the income he needed. There’s nothing to show that TCL carried out any research on and considered the performance of Mr G’s existing plan. It didn’t, for example, determine it was performing poorly or below the required growth potential he needed to meet his objectives, such that Mr G might have been better off by transferring thus demonstrating it was in his best interests. Had TCL properly explored this, it’s entirely possible that Mr G’s existing plan might have been on track to deliver what he needed. In which case, rather than recommend a transfer, TCL might simply have needed to reassure Mr G that his existing arrangement was suitable at this time. And on the topic of performance, I also note TCL doesn’t appear to have produced an illustration of Mr G’s existing plan alongside the illustration for the new one 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 Mr G was able to make an informed decision about things. Turning to TCL’s assessment of Mr G’s attitude to risk – it determined he was a ‘Medium’ risk investor. But again, if TCL didn’t understand Mr G’s income and capital needs in retirement and whether his 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 Mr G determine the level of risk he was comfortable, willing and/or needed to take to achieve his objectives. It’s entirely possible that the current approach and risk level of Mr G’s existing plan (in my view reasonably considered to be a lower risk approach than Medium risk) was appropriate and suitable – he might not have needed to take on a greater level of risk overall to achieve things. As such, I’m not persuaded Mr 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 Mr G at this time. I’ve also considered that, while the new pension Mr G transferred to was more expensive, part of the additional cost was for ongoing advice. So, was this good reason to transfer – would Mr 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 Mr 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 Mr G’s existing pensions were on track to meet his needs, in which case there would be no need for ongoing advice at this stage. Without a better understanding of Mr G’s goals and objectives, I can’t see the potential benefit of ongoing advice outweighed the additional cost for Mr G at

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this time. So, taking all of the above into account, I’m not persuaded the pension switch advice was suitable or in Mr G’s best interests. Ultimately, I’m not persuaded it can be shown that TCL properly and sufficiently understood Mr G’s retirement plans to justify transferring at this time. If once Mr 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 Mr G’s existing arrangement did not provide pension freedom flexible benefits, including more flexible death benefits, – which it seems was the only rationale – or simply giving Mr G what he thought he needed is not, in my view, sufficient reason to demonstrate switching was in Mr G’s best interests. I’ve considered the fact that Mr G approached TCL for advice wanting to review his pension. Does this mean Mr G would have switched regardless? I’m not persuaded it does. I don’t think this means Mr G was set on moving away from his existing provider such that he would have insisted on transferring in any event. I’ve seen no evidence that Mr G was an experienced investor or otherwise possessed the requisite skill, knowledge and confidence to make his own investment and pension decisions and go against the professional advice he was seeking. So, I think if TCL had given suitable advice – that is, he should retain his pension – then I think Mr G would have followed that advice. So, I intend to uphold this complaint. In relation to the ongoing advice fees, the investigator concluded that Mr G should receive a refund of the ongoing advice fees he paid after he made it clear that his relationship with TCL had ended and no ongoing advice was needed going forward. But the redress calculation I have set out below already takes into account that, if suitable advice had been given, Mr G would not have paid ongoing advice fees – he would have retained his existing plan. So, there’s no separate refund due. Mr G has raised a number of other complaint points about the fees charged and that he 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. Finaly, 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 Mr G’s correspondence with TCL that he has been concerned and distressed by the advice he received and its apparent this has had a detrimental impact on him. 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 Mr G, through his representative said he was pleased with the outcome, but had a couple of points to make. He said if his plan hasn’t lost value since the advice, TCL would only have to pay him £200 compensation. He said he is concerned that TCL took a large fee for the advice, which it isn’t expected to be returned. He said he understood the redress was designed to return him to his original position, but asked why TCL should keep the advice fee. He asked if the compensation would be payable to him directly. Mr G also said that he couldn’t see any reference in my provisional decision to a point he’d made about missing the year-end deadline for a pension contribution, which resulted in a higher corporation tax bill. He’d previously asked why TCL didn’t discuss at the advice meeting making an additional pension contribution. And asked why it was to be

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discussed later – surely it should have made the correct recommendation to him to ensure taxation benefits were explored. TCL said it disagreed with my provisional decision. It said the main reason Mr G moved his pension was that it did not offer drawdown and the new one did. It said it didn’t have a conversation with Mr G about his 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 Mr G decided to move his pension – it had nothing to do with a discussion about his 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 Mr G’s pension was because his 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 Mr G’s best interests. TCL’s role was to advise Mr G on what was in his best interests having properly explored his 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 Mr G’s retirement needs to justify transferring at this time. I don’t think the advice was suitable. I can understand Mr G’s concern that he 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. Mr G paid TCL’s initial advice fee by deduction from his investment rather than paying it separately. So, no separate calculation is required for the fees here. So, if the calculation shows Mr 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. As to how any compensation should be paid, I’ve explained this below. Finally, to Mr G’s point about why TCL didn’t discuss making a pension contribution at the advice meeting. It’s important to point out that my role is not to decide what the best or most perfect advice would have been for Mr G, or indeed any consumer. My role is to look at the advice and recommendation made at the time and decide whether, from the information provided, if it was in line with the consumer’s needs and objectives at the time taking account of their personal and financial circumstances. So, while its possible there were other options available to Mr G at the time of the advice rather than switching his pension, I can only look at the advice Mr G accepted and assess the suitability of that – I cannot state or decide what else Mr G should or could have done. Putting things right – fair compensation My aim is that Mr G should be put as closely as possible into the position he would probably now be in if he had been given suitable advice. I think Mr G would have remained with his previous provider, however I cannot be certain

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that a value will be obtainable for what the previous policy would have been worth – although I expect TCL to make best efforts to obtain it from the provider. I am satisfied what I have set out below is fair and reasonable, taking this into account and given Mr G's circumstances and objectives when he invested. What must TCL do? To compensate Mr G fairly, TCL must: • Compare the performance of Mr G's investment with the notional value if it 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 Mr 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 Mr G's pension plan, it should pay that amount direct to him. 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 Mr G won’t be able to reclaim any of the reduction after compensation is paid. • The notional allowance should be calculated using Mr G's actual or expected marginal rate of tax at his selected retirement age. • It’s reasonable to assume that Mr G is likely to be a basic rate taxpayer at the selected retirement age, so the reduction would equal 20%. However, if Mr 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 Mr G £200 for the distress and inconvenience caused for the reasons I’ve explained. • Provide Mr 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 Mr G how much has been taken off. TCL should give Mr G a tax deduction certificate in respect of interest if Mr G asks for one, so he can reclaim the tax on interest from HM Revenue & Customs if appropriate. Portfolio name Status Benchmark From ("start date") To ("end date") Additional interest Mr G's pension Still exists and liquid Notional value from previous provider Date of investment Date of my final decision Not applicable

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Actual value This means the actual amount payable from the investment at the end date. Notional Value This is the value of Mr G's investment had it 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 Mr 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 Mr 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 (and only if it is unable to do so) TCL will need to determine a fair value for Mr 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 Mr 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: • Mr G wanted Capital growth with a small risk to his 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 his 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 Mr G's risk profile was in between, in the sense that he was prepared to take a small level of risk to attain his investment objectives, broadly in line with his current approach. So, the 50/50 combination would reasonably put Mr G into that position. It does not mean that Mr G would have invested 50% of his 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 Mr G could have obtained from investments suited to his objective and risk attitude.

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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 Mr G to accept or reject my decision before 12 May 2026. Paul Featherstone Ombudsman

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