FT Adviser (21/08/2019) – An adviser has criticised a recent Financial Ombudsman Service (Fos) decision that resulted in Scottish Widows paying its client’s overseas transfer charge, claiming it paves the way for more claims.
In a Financial Ombudsman Service (Fos) decision out this week, a client of Scottish Widows complained after the proposed transfer of his pension plan to a qualifying recognised overseas pension scheme (Qrops) became subject to the 25 per cent overseas transfer charge, even though he had made the request before the charge came into effect in March 2017.
HMRC guidance says transfers requested before the March deadline were not liable for the overseas transfer charge.
The dispute centred on whether or not the client’s request to transfer had constituted an official request as opposed to a casual enquiry.
The ombudsman ruled it had and that Scottish Widows should take on the cost of the charge as well as pay the client £100 for the trouble caused.
But Mike Lacey, partner at Berkshire-based financial adviser firm Bowman Pension Consulting, criticised the decision.
Mr Lacey said: “The Fos ruling that Scottish Widows should have to pay the overseas transfer charge is ridiculous.
“An instruction to Scottish Widows to pay the charge will incentivise the client to transfer when he may not have made that decision if the charge had been payable from the policy.”
He also warned there could be more claims of this type being brought by CMCs.
Ricky Chan, director and chartered financial planner at IFS Wealth & Pensions, said: “I think this case is more of an isolated/one-off type of incident, where the Fos felt that Scottish Widows misinterpreted the rules about the Qrops transfer being chargeable.
“Unless there were many incidences like this where providers misinterpreted the rules and delayed the Qrops transfers, I don’t think there are many people affected so CMCs wouldn’t bother here.”