8 complaints against Options UK Personal Pensions Ltd upheld in just 1 week

In the space of 1 week, the Financial Ombudsman Service (FOS) upheld 8 complaints against Options UK Personal Pensions Limited.

The complaints

It seems that many of the complains result back to the same reason. Customers of Options UK have complained that Options shouldn’t have accepted their applications to transfer there benefit pension into a self-invested personal pension (SIPP).

So, what happened?

A lot of these claimants said an advisor visited them in their homes and led them to believe their pensions could achieve better pension benefits by transferring. These claimants said that prior to being contacted by an advisor they hadn’t considered moving their pensions away from their previous pension providers.

In one particular case, a claimant claimed he had very little knowledge of investing at the time and didn’t understand the concept of transacting on an “execution only” basis. He said he understood the advisor was providing him with advice and decided to go ahead with the transfer based on recommendation.

Case Study 1 – MR. A

Mr. A said he was approached by an advisor in an airport as he was leaving to work abroad. At the time, he had an Armed Forces defined benefit (DB) pension from his service in the military. This claimant explained he was enticed into transferring his DB pension to a SIPP by the prospect of improved performance.

He says the advisor told him his Armed Forces pension wouldn’t “grow at all” and transferring “would result in better returns.” He says he had no previous investment experience, and a low attitude to risk and capacity for loss.

He understood the advisor, was “acting in his best interests to help and would only advise him on how to invest his pension more wisely.” He says the advisor told him any risks associated with the investment would be low to medium.

Mr. A complained to Options UK in December 2019 through a professional representative. The representative complained on his behalf to Options UK explaining that the firm owed Mr. A a duty of care which extended to acting in his best interests and not acting negligently.

The representative referred to FCA publications confirming that while SIPP operators couldn’t give advice, they were responsible for the quality of business they administered. Options UK therefore should have identified instances of consumer detriment and provided appropriate risk warnings.

The representative commented that Mr. A had been advised on the transfer of his DB pension by an unregulated adviser, so the transfer should never have been allowed to go ahead. To put things right, Mr A was seeking to be put back in the position he would have been in had the transfer not taken place.

Options UK issued its final response rejecting Mr. A’s complaint in February 2020 stating “as confirmed by Mr. A in his SIPP application, the advisor acted only as an introducer and hadn’t provided advice.”

The decision

Mr. A’s complaint was referred to the FOS. The FOS decided to upheld that Options UK should have complied with its regulatory obligations which required them to conduct sufficient due diligence, they shouldn’t accept business from this advisor, including Mr. A’s application. To put things right Options UK must calculate the loss taken and pay Mr. A the award.

Case Study 2 – Mr. B

In another case, Mr B said that a representative visited his home and told him that the SIPP would grow in value whilst the pension he currently had in the military would not. This claimant then transferred his pension to an Options UK SIPP due to the advice given.

This claimant had no financial expertise or experience. He explained that he felt Options UK should have recognised that the advisor company had been providing him with advice to transfer a defined benefit pension to a SIPP, something that the regulator, the Financial Conduct Authority (‘FCA’) see to be unsuitable.

His representatives further say Options UK should have made him aware of the risks of this – and to not accepted the transfer.

Options UK described this claimants application to have clerical errors on their part. This claimant signed conflicting paperwork with Options UK in which he confirmed in one document that he’d been advised by the advisor and in others that he hadn’t had any advice.

Further to this, Mr B’s investments haven’t achieved the returns promised and carried high fees. He now knows the investment was unlikely to provide him with a better return than his original armed forces pension, and the benefits are likely to be worse.

It is believed that if Options UK had carried out its obligations properly, it would have recognised that the advisor was likely to be providing unsuitable advice to him. Regardless of the errors Options UK admitted to, Options UK said the complaint from Mr. B was brought out of time; and that they don’t consent to being investigated.

This claimants investment was made around August 2012 and the complaint was made to Options UK by his representative in April 2020. This is longer than the six years allowed under certain rules.

Options UK also said that he should have known more than three years before he complained that he had cause to complain to Options UK. They explained that because Mr B signed paperwork, when he applied for the SIPP, acknowledging the rights that he was giving up from his existing pension scheme, he should have known he could complain back then in 2012.

However, the FOS did not agree with this and did not agree that Mr. B was aware. Mr B initially spoke with colleagues who alerted him to a potential mis-sale of the SIPP transfer in 2019. This was followed by an online advert he saw, after which he made enquiries with his representative.

He then brought his complaint to Options UK in April 2020, once he’d been advised by his representative that Options UK had likely done something wrong. So, it was considered that the complaint had been brought within three years of when this client knew, or should have known, he could make a complaint against Options UK. Therefore, it was made in time. Options UK did not respond to this.

The decision

The FOS decided that they would uphold Mr. B’s complaint. The FOS said they require Options UK to calculate the loss Mr B has suffered since the transfer took place and award compensation, as well £500 for the trouble and stress this has caused him.

Further information and decisions can be found on the FOS website.

Further reading

Mis-sold pensions – Oakwood Solicitors

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