The woman, named only as Mrs W, cannot read or write and was “therefore heavily reliant on the advice that she was receiving verbally” from Portal Financial Services, an FOS report revealed.
She told the FOS she understood from Portal that she would be able to take the tax-free cash lump sums from her pensions without having to transfer.
She said that it was only later that she discovered that her pensions had been transferred.
The ombudsman ruled that the written information that she was given and signed “in my opinion cannot in the circumstances be taken as having been fully understood by Mrs W”.
An adjudicator had already ruled in June last year that the complaint should be upheld.
When Portal wrote to Mrs W on 14 September 2012 it said that it recommended that she did not transfer from her employer’s pension scheme.
Portal also said that, if Mrs W wished to proceed, it would treat her as an insistent client. It provided an insistent customer form, which Mrs W signed. This set out that she was aware that transferring from her employer’s pension scheme was against Portal’s advice and that she would be worse off in retirement.
However, Adrian Hudson, the ombudsman, concluded: “If Portal having advised Mrs W not to transfer out had not persuaded her of the folly of her actions it should in my opinion have declined to transact the business.”
He said: “I cannot ignore that fact that Portal knew that Mrs W could not read or write. It was required to act in the best interests of Mrs W. Portal knew that Mrs W would be worse off if she transferred from her former employer’s pension scheme.
“I take the view that Mrs W’s circumstances were such that Portal should have acted with considerable caution. If it wished to act for Mrs W, it should have given all the information she needed in order to make an informed decision – and in a format that she would have been able to understand.
“Mrs W’s objective was recorded as being “to make home improvements and have solar heating installed.” Portal noted that Mrs W did not want to raise finance to pay for that work. I am not satisfied that it undertook an adequate review of the other options.”
He added: “Although it advised her not to transfer, Portal should have made Mrs W aware of all of the benefits that she was giving up and the shortfall that she might suffer.”
He ordered Portal to carry out loss calculation on the basis that Mrs W had remained a member and that she was given ill health early retirement in March 2014.
If there is a loss, Portal must pay redress in line with the guidance. Either as a pension plan or a lump sum after deducting 15%, he said.
Portal must also pay £250 to Mrs W for “the trouble and upset she will have suffered through because it arranged the transfer”.
Portal is yet to comment on the ruling.
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