Client Wins Compensation from True Potential Wealth Management Over Unsuitable Pension Transfer

Mr C was an existing client of an adviser, referred to as Mr H. After Mr H moved to True Potential, Mr C received a direct marketing offer relating to a new pension option.

Mr C already had a pension with Prudential, but after speaking to Mr H, he agreed to switch into the True Potential fund.

He later complained that the move was unsuitable. He said that the new arrangement involved greater risk and had performed worse than the pension he had left.

True Potential said this was a ‘non-advised’ sale rather than regulated financial advice. Mr C was unhappy with this, and escalated his complaint to the Financial Ombudsman Service.

The Financial Ombudsman Service (FOS) is an independent service that settles complaints between consumers and regulated financial services businesses.

In Mr C’s case, the Ombudsman considered the evidence and concluded that Mr H had done more than provide information about a product. It found that he had advised Mr C to switch and had also arranged the transfer. The Ombudsman also found that True Potential was responsible for those acts.

Financial advice given to clients must be suitable for their circumstances, objectives and attitude to risk. The Ombudsman concluded that the recommendation to move from the Prudential fund to the True Potential fund was unsuitable. True Potential was therefore required to compensate Mr C for the losses caused by the transfer and to restore him, so far as possible, to the position he would likely have been in if the switch had not happened.

This FOS decision is likely to interest clients affected by the wider concerns that have recently arisen around historic transfers into True Potential products.

TLW has previously reported on True Potential setting aside £100 million for a redress scheme and concerns have also been raised about transfers described as direct offers or ‘non-advised’ sales, particularly where advisers were involved in discussing or arranging the move.

It has also been reported that advisers receive commissions of up to 8% of assets transferred in some cases. Not every transfer was unsuitable, but such high commissions may lead some clients to question whether advice was given in their best interests. On a transfer of £500,000, an adviser could receive as much as £40,000.

You may wish to seek legal advice if:

• Your adviser recommended moving your pension or investments into a True Potential product.
• The switch was described as ‘non-advised’, but your adviser discussed the move or helped arrange the transfer.
• You were not given a suitability report or a clear explanation of the risks.
• The new product involved greater risk or worse performance.
• You suffered financial loss after the transfer.

Cases like this will typically depend on the details of what was said, how the transfer was presented, what documents were provided, and whether the move was appropriate for your circumstances.

Sarah Spruce, Legal Director and Head of the Professional Negligence team at TLW Solicitors, said of the successful case:

“Clients are entitled to expect that any pension or investment recommendation is suitable, properly documented, and made in their best interests.

This FOS decision shows that a firm may still be held responsible where a transfer is later described as ‘non-advised’, if the evidence shows that advice was in fact given and the client suffered loss as a result.

If you or a loved one are concerned that you may have lost out financially following a transfer to True Potential Wealth Management, then please get in touch with a member of my team for a free, confidential and no obligation discussion to explore your options.”