“I say this because her answers weren’t completely consistent and I think this suggests that she didn’t fully understand the questions she was being asked,” the ombudsman explained.
“I think that if her answers had been further investigated, a more appropriate assessment would’ve been that of a cautious investor.”
The ombudsman concluded that, while they agreed that the investment recommendation might’ve been suitable for someone with a balanced outlook in investing, they didn’t consider that Mrs B’s answers to the questions matched the description of a balanced investor.
Putting things right
The ombudsman stated that its aim in awarding fair compensation was to put Mrs B back into the position she would likely have been in, had it not been for the AR's unsuitable advice, meaning she would have remained invested with her previous provider.
They argued that any loss Mrs B has suffered should be determined by obtaining the notional value of the pension from her previous provider, and subtracting the current value of the pension from this notional value.
The compensation amount should, according to the ombudsman, be paid into Mrs B’s pension plan if possible and the payment should allow for the effect of charges and any available tax relief.
However, if the payment into the pension isn’t possible, the ombudsman directed that it should be paid directly to Mrs B as a lump sum after making a notional reduction to allow for future income tax that would otherwise have been paid.
tom.dunstan@ft.com
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