Interactive Investor Service Limited · DRN-6173163

The complaint Mr K complains that Interactive Investor Service Limited (Interactive Investor) made administrative errors and omissions (lack of communication) relating to contributions he made to his self-invested personal pension (SIPP) during the 2023/2024 tax year. He says Interactive Investor’s lack of confirmation about alterations he had requested caused him a great deal of stress and upset and, although this matter was seemingly resolved in July 2024, another error in January 2025 caused him further distress and required him to contact HMRC for guidance on how to complete the pension contribution part of his self- assessment return. Mr K would like compensation for the distress and inconvenience this matter has caused him in addition to any financial loss he’s suffered from Interactive Investor’s (in) actions. What happened Mr K, who had been retired for some time, took on an employed position for the 2023/2024 tax year. He joined the employer’s workplace pension and because he had relevant earnings for that year, decided to open a SIPP with Interactive Investor and make personal contributions. One payment on 5 March 2024 was for £20,000, but when he realised he could make further contributions up to his annual allowance (his earnings for the year) he asked Interactive Investor to amend this contribution to a net payment, and he made a further (net) contribution later in the month. Mr K, in preparing his self-assessment form for HMRC, then realised that pension contributions had been made to his workplace pension, so he asked Interactive Investor to either adjust his earlier payments or amend one of them to a gross figure instead of net. He says he didn’t receive a response to his requests, and it wasn’t until May 2024 that Interactive Investor confirmed that his initial contribution had been amended to a gross payment – which Mr K says satisfied his requirements and meant he was happy that his contributions hadn’t exceeded the overall limits. But Mr K did complaint about Interactive Investor’s service and lack of response. He wanted compensation for any tax liability or interest he may have lost due to Interactive Investor’s lack of timely response. Interactive Investor acknowledged that it had provided Mr K with a poor service and that it had been slow to provide the information he requested. It paid Mr K £200 for its poor service, although Mr K says it told him during the conversation that the £200 was in consideration of any financial loss he may suffer. Interactive Investor also responded to Mr K’s request to amend his second contribution. It asked him to provide certain information for it to consider any amendment to his second payment but, because Mr K said it wasn’t possible to provide the evidence required, Interactive Investor concluded that he was unable to proceed with those options. However Mr K says Interactive Investor’s final response letter on the matter portrayed a different perspective of what was discussed but because he was satisfied the original £20,000 payment had been amended from net to gross – and he’d been offered compensation for his loss – he was happy with the outcome of its investigation.

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In January 2025 Mr K contacted Interactive Investor again as his annual SIPP statement suggested the original £20,000 contribution had been made net of tax, which contradicted his request – and Interactive Investor’s subsequent confirmation – for it be changed back to a gross payment. Mr K was concerned that his tax position with HMRC might therefore be incorrect. In its response Interactive Investor said it would correct the position regarding the original contribution but went on answer Mr K’s previous complaint about not receiving a response to his request to cancel/amend the second contribution. It said it had been unable to process any refund from the SIPP without evidence of all Mr K’s contributions and earnings, but it should have explained that to him in the first place and should have let him know that it’s back-office team was working on his request. It paid Mr K a further £200 for its additional service-related errors and delays. But Mr K didn’t believe the amount of compensation he’d been offered was sufficient. He said that although he’d been offered compensation for Interactive Investor’s errors and poor service – as well as the financial loss he’d suffered – it didn’t take into consideration the time and effort involved in contacting Interactive Investor, correcting its mistakes with HMRC, and getting things resolved, as well as the stress the matter caused him which affected his ability to work and led to a loss of income. Mr K brought his complaint to us where one of our investigators looked into the matter. In the first place they answered Interactive Investor’s assertion that the complaint had been brought outside of the time limits allowed and, once this was accepted, considered whether the complaint should be upheld. They concluded that Interactive Investor’s offer of £400 total compensation was fair and reasonable when considering the errors that it made. They didn’t believe Interactive Investor should pay further compensation for Mr K’s concerns over his health and the resulting loss of income because they didn’t think there was sufficient evidence to reasonably conclude that Interactive Investor’s errors directly led to him being unable to work. Mr K didn’t think Interactive Investor had actually paid him the compensation but, in any case, he didn’t think it fairly represented the distress and inconvenience the matter had caused him. He thought part of the payment was in respect of the financial losses he’d incurred, and he set those out as well as reiterating the extra work he’d done to rectify the situation and told us about the worry he experienced while he was waiting for Interactive Investor to confirm it had (or could) make the changes he’d requested. Mr K said it had been agreed by telephone that the first £200 was in respect of his losses and although this wasn’t supported by what Interactive Investor had said in its final response letter of July 2024, he didn’t seek to correct that as he was happy to “draw a line” under the matter at that point for compensation of £200. He said Interactive Investor introduced a number of errors and contradictions about what happened in its final response letters – so this shouldn’t be taken as the most accurate portrayal of the telephone conversation he had on 22 July 2024. He asked for his complaint to be referred to an ombudsman – so it’s been passed to me to review. 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.

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And having done so I’ve reached the same conclusion as the investigator. I imagine Mr K will be disappointed by this outcome and I can understand his position here – believing that the amount of compensation he’s been offered isn’t sufficient for both the distress and inconvenience he’s been caused as well as a financial loss he says he’s incurred. But I think Interactive Investor’s offer is fair and reasonable in the circumstances, so I’ll explain my reasons. The initial contribution Mr K had taken an employed position for a year having been retired for some time. He decided to use that opportunity to make further pension contributions and opened a SIPP with Interactive Investor. He made a significant single gross contribution on 19 March – which he then asked to be changed to a net payment – followed by a smaller contribution on 28 March 2024 believing that he had unused allowances at that time. When he began to prepare his self-assessment return in early April 2024 Mr K realised his employer had made contributions to his workplace pension and therefore, he ran the risk of overfunding his SIPP. He asked Interactive Investor to amend his initial contributions, but when he didn’t receive a response he then asked for his second contribution to be reduced. Mr K’s complaint about this part of the matter is that Interactive Investor didn’t respond to the first request in a timely manner, and in the case of the second request didn’t acknowledge it at all. He said he had to spend a lot of time communicating with Interactive Investor to make any changes and this was at a time when he needed to complete his self-assessment tax return and was unable to do so without confirmation of what Interactive Investor had amended. He thinks this prevented him from making any more contributions up to the maximum allowable and caused a loss of interest by not completing his tax return at the first opportunity and further interest lost (and the potential for further tax free cash) from making a further contribution or the net contribution as opposed to the gross contribution he did make. So I’ve looked at what happened here in respect of the delays and lack of service Mr K says he received, and any potential financial loss he says he suffered for which he believes he was offered compensation in the call of 24 July 2024. Interactive Investor’s service relating to Mr K’s requests I’ve identified two main errors in terms of lack of response/delays from Interactive Investor arising directly from Mr K’s pension contributions. After making his first contribution Mr K thought that if he amended that contribution from gross to net it would allow him to get closer to his maximum allowance and therefore reduce his tax liability. He asked Interactive Investor to make that amend around 19 March 2024, but from what I could see he wasn’t given confirmation that any action had been taken until May 2024. Interactive Investor says that it quickly acknowledged receipt of the request and that it would be looked at by its back-office team. It also says it did make the amendment on 2 April 2024 – before the end of the tax year. I’ve no reason to dispute that fact but it didn’t make Mr K aware of the change. This meant that, although Interactive Investor didn’t directly prevent him from completing his self- assessment return, he didn’t feel able to complete it without confirmation of the correct contribution figures. Nor could he be sure that he hadn’t over funded his SIPP. The second error was following Mr K’s next contribution. After he made the contribution Mr K became aware that he might have overfunded his SIPP as a result of employer contributions to his workplace pension scheme. So he asked if Interactive Investor could alter the level of

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(either of the) contributions. It wasn’t until over a month later that Interactive Investor contacted Mr K to discuss how that might be achieved. Again Interactive Investor has said that it acknowledged Mr K’s request the same day and had been reviewing it during that time but it didn’t make him aware of that and I can understand Mr K’s frustration that when Interactive Investor contacted him it wasn’t to confirm that it had (or couldn’t) make the amendment but to discuss what was required for it to be able to see if an amendment could be made. I don’t think Interactive Investor acted unreasonably from that point as it was difficult matter to simply issue a refund without substantial evidence to support such an action. It could have resulted in a breach of HMRC pension contribution rules. But I have taken into account Mr K’s understandable frustration around the evidence he was asked to provide and the fact that it simply wasn’t possible to provide what was asked for. In addition Mr K thinks that the final response letter he received which addressed this issue was full of inaccuracies and didn’t reflect the conversation that took place regarding what evidence might be acceptable. Mr K believes the discrepancies in the letter may even support the idea that it confused him with another client because of a reference to things which were at odds with his own circumstances. But ultimately because he was given clarification around the £20,000 contribution Mr K didn’t need to pursue the second amendment. However I do think Interactive Investor should have made it clear to Mr K much earlier in the process what action it was taking, why it needed to review his request, and why it couldn’t agree to the amendment straight away. Had it confirmed in its acknowledgement of 3 April 2024 that making such an alteration (potentially involving a refund of contributions) would require considerable investigation and wasn’t straightforward, I think Mr K might have turned his attention more robustly to the clarification of the £20,000 investment (which Interactive Investor said had been resolved at that point anyway) thereby resolving the whole issue and not subjecting Mr K to a further month or so of worry and stress. However, Interactive Investor has accepted it didn’t provide Mr K with timely, good service on both occasions and has paid compensation. I’ll consider the amounts involved in relation to the rest of the complaint later. I should also reference the further complaint Mr K made in January 2025 following the receipt of his annual SIPP statement. I can understand why Mr K questioned this. His £20,000 contribution was noted as a “net member contribution” with a tax relief contribution of £5,000 – which would suggest an overall contribution of £25,000. So I think it was reasonable for him to assume that his earlier request for the gross contribution to be £20,000 hadn’t been implemented. I understand Interactive Investor later confirmed this had been corrected internally but not before Mr K had to engage in further discussions with both Interactive Investor and HMRC to confirm how he should enter the contribution on his self-assessment return. This would also have reignited Mr K’s frustration – having thought things had been resolved in July 2024 – and caused him to commit further time and energy in ensuring things were corrected. So I think that issue ought to be further considered within the overall compensatory payment. The claim for financial loss

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Mr K’s complaint about the overall compensatory payment he’s received is that £200 of that was agreed for the financial loss he said he told Interactive Investor in July 2024 that he would suffer as a result of its actions. He thinks therefore that the other £200 isn’t sufficient for the distress and inconvenience alone that he’s suffered. Mr K says there was explicit agreement in a phone call in July 2024 that Interactive Investor would pay him £200 for the financial loss, which he says he was happy to accept at the time for the whole issue being apparently resolved. I’ve asked Interactive Investor to provide a recording of that call, but it hasn’t been able to. So I’m unable to confirm what might have been said. I’ve been provided with a copy of the final response letter that was subsequently issued as confirmation of the call, and it makes no reference to the compensatory payment being for financial loss stating, “I have awarded a payment of £200 for the inconvenience....” So there’s little evidence to support the claim that Interactive Investor did pay £200 for or towards the financial loss Mr K says he suffered. But I’m mindful of the fact that Mr K says the discussion was around compensation for financial loss and has also disputed the accuracy of some of the information within that final response letter as a portrayal of what was discussed. In addition Mr K has also provided some notes he said he made around the time of that discussion which set out his claim for redress. I don’t dispute Mr K’s recollection of events I just simply can’t confirm them, but I do think it would be useful to look into the financial loss Mr K has referred to in order to establish what those losses were. I asked Mr K to confirm them and he said “the calculations were based at the time on the difference of being able to submit my tax return immediately after the end of the 2023-2024 tax year, with confidence that the pension contributions were allowable, which would have provided an immediate tax refund which could have been invested, or having to wait with the funds uninvested until I had a definitive answer to the status of the pension contributions, and the loss of income due to that.” But I’m not persuaded these were actual losses that Mr K incurred as much as consequential losses that may have occurred depending on both his and Interactive Investor actions. Mr K says that if he had been provided with timely and correct information about his contributions, he could have submitted his tax return and received a tax refund which he could then have invested. So he was deprived of interest on his investment. But Mr K says he was happy with the status of his contributions following communication with Interactive Investor Services Limited by 22 May 2024. So, although I accept he was still trying to resolve the complaint about his subsequent contribution, this ought not to have prevented him from submitting his tax return at that time. So the timeline thereafter would have been the same, meaning that even if I accept that Mr K could have invested a tax refund as he set out to us – and if I accept the interest rate he claims he could have received, the interest lost for the delay I’ve noted above would be less than £30. And I have nothing to support the idea of how Mr K would have invested his refund – so it’s difficult to even quantify the consequential loss I’ve identified. Turning to Mr K’s other claim, and if I understand him correctly, he says he’s lost out on interest, and the potential for additional tax free cash when he draws his benefits, from the £5,000 that remained uninvested while Interactive Investor considered his request to alter the contribution from gross to net. But the £20,000 was invested immediately and, even though Interactive Investor didn’t make Mr K aware of the actions it took for over a month, it did carry out his request to return the contribution to a gross payment – so the correct amount of money was invested in line with Mr K’s request. So I’m not persuaded that there was an additional sum of money that remained uninvested during this time.

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But even if I am wrong in my assumption there’s little evidence to support an actual loss that did occur here. It’s possible there was a small consequential loss from Mr K not being able to reinvest his tax refund, but I don’t think it would equate to the £200 Mr K says Interactive Investor paid him for his financial loss. However, I don’t dispute that Mr K may have potentially missed out on investment opportunities as result of Interactive Investor’s lack of communication, and while I’m not persuaded there is a case for looking at financial loss I can consider whether the loss of a potential investment opportunity warrants compensation for the raising of Mr K’s expectations. So I’ll now consider the compensation payment that Interactive Investor has made in respect of the impact this whole matter has had on Mr K. Interactive Investor’s compensatory payment I’ve set out in detail above the delays and poor service that Interactive Investor caused in this case. Interactive Investor hasn’t disputed these or the impact it had on Mr K and paid him a total of £400. I don’t take lightly the impact this had on Mr K. The poor communication caused him to worry about his retirement affairs for an extended period – although I agree with the investigator that around May/June 2024 he seemed content with the outcome until a problem arose again in January 2025. He’s told us how this caused him a lot of unnecessary effort in consulting with both Interactive Investor and HMRC and was concerned that he might have over funded his SIPP and may not be able to complete his tax return correctly. Mr K has also told us of the general impact this had on him as a result of the additional stress and worry the matter caused. He says it affected his ability to work and therefore his income – although I haven’t seen anything to support the idea that Interactive Investor’s actions directly prevented him from working. He thinks the award for compensation should be higher to reflect this and the financial loss award should be applied separately. I have thought carefully about this, and I should start by saying that an award isn’t made in order to punish a business for its actions – but to reflect the impact its actions had on a consumer. Our website sets out general guidance on our typical approach here. I think this whole matter – including the question of the potential consequential losses – caused Mr K considerable distress, upset and worry – and significant inconvenience and disruption that needed a lot of extra effort to sort out. The impact of this lasted for some months. This would usually suggest a recommended award of between £300 and £750. Interactive Investor had paid Mr K – and I’ve seen evidence to show the payment has been made - £400 in compensation. This is within the range for the impact that I’ve noted above and therefore I consider it to be fair and reasonable in the circumstances. In my view the compensatory payment fairly reflects the impact this matter had on Mr K and is within the range of what I would have considered an appropriate award in all the circumstances. My final decision Interactive Investor Services Limited has paid Mr K £400 compensation for the impact this matter on him. I think that’s fair and reasonable in the circumstances, so I don’t think it needs to do anything more. Under the rules of the Financial Ombudsman Service, I’m required to ask Mr K to accept or reject my decision before 13 May 2026. Keith Lawrence Ombudsman

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