Ombudsman backs client after TenetConnect failed to give her suitable advice.
The individual who is known as Mrs L to protect her identity raised the claim with FOS after unsuitable advice caused her to pay tax that she felt could have been avoided.
Mrs L, told her adviser she wanted to use her personal pension plan to raise the capital that she wanted to use for property investment. The firm claim Mrs L had clear information by Aviva regarding the tax that would apply if she surrendered her personal pension plan.
TenetConnect also said it could not find a suitability letter or fee agreement between Mrs L and their appointed representative (AR) that related to advice to surrender her Aviva pension. TenetConnect believed the advice provided from the AR was generic rather than financial advice. They also found Mrs L to be confused about what the advice actually meant and how it should be given.
The ombudsman investigator considered whether the network's AR had provided formal financial advice on this issue. It found that, in 2014, the complainant signed a client agreement with TenetConnect's AR. The agreement was for the AR to provide financial advice regarding investments.
Mrs L contacted the AR in June 2015 explaining her intention to purchase a buy-to let property and asked TenetConnect's AR about surrendering a PPP that she held with Aviva, the ombudsman said.
A year later, Mrs L applied to withdraw all of the money held in her Aviva PPP. This pension had a fund value in excess of £30,000 and had guaranteed benefits in the form of a guaranteed annuity rate (GAR).
Mrs L's Aviva PPP was surrendered in September 2015. It had a fund value of £33,052. Aviva deducted £9,602 for tax, and Mrs L received a net lump sum of £23,450. Email correspondence between Mrs L and the AR just before the surrender of her PPP, together with the signed declaration
by the AR on the application form, made it likely that Mrs L had been advised on that matter by the AR, the ombudsman's investigator said.
The AR should have advised Mrs L not to surrender her PPP, explaining why not, the FOS said, adding: "If the AR had done that, the client would have most likely followed that advice."
After considering all the available evidence, the FOS looked at the relationship between Mrs L and the AR.
"Nothing in the emails suggested Mrs L shouldn't surrender her policies or explained what she was giving up," the ombudsman added.
TenetConnect argued Mrs L had already made her mind up to surrender the PPP before dealing with its adviser.
From the information provided the ombudsman took Mrs L side in the view it was unlikely that Mrs L would have gone against advice had it been explained to her properly.
The Financial Ombudsman Service concluded TenetConnect was responsible for the actions of its AR and should compensate Mrs L for the loss she suffered and return her to the position she would have been in if she received suitable advice.
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