JLT Wealth Management Limited · DRN-5733042

The complaint Mrs C complains that she was given unsuitable advice by JLT Wealth Management Limited (‘JLT’) to transfer her Defined Benefit Occupational Pension Scheme (‘DB scheme’) benefits in 2010. What happened Mrs C’s former employer decided to offer some scheme members an enhanced cash equivalent transfer value (‘CETV’) to consider transferring out of the scheme, this included the option to receive the enhancement as a cash payment. The scheme was in deficit and did not have enough funds to pay the full CETV to its members. As I understand it, the offer was explained in a letter dated 9 April 2010 and was available until 30 June 2010. The employer paid JLT to give advice to members of the scheme who expressed an interest in receiving advice on the merits of transferring out of the DB scheme. Having reviewed the information it obtained from Mrs C and the DB scheme, JLT advised Mrs C not to transfer. Mrs C decided to go ahead with the transfer – and take the cash payment – and JLT facilitated this on an “insistent client” basis. The fact-find A completed fact-find signed and dated by Mrs C on 11 May 2010 confirmed, amongst other things, that Mrs C: • Was married with two dependent children. • Was employed and earning £5,000 annually. • Had a retirement age of 65 and a preferred retirement age of 60. • Had a property valued at £175,000 with an outstanding mortgage of £81,000 and a car loan amounting to £6,500. In relation to the transaction itself, it was recorded that Mrs C had a cautious attitude to investment risk and that the DB scheme represented a significant proportion of her retirement funding. In a section titled “Please answer the following questions to enable us to advise you on the most appropriate option for your circumstances”, Mrs C was asked to answer a number of questions, the answers to which were largely pre-typed and just had to be selected. For example: “A cash sum now You are being offered a cash sum or enhancement to your transfer value for transferring away from your former employer’s pension scheme. Please tick the one option most appropriate for you.” And in response to this Mrs C selected “I would like a cash sum now at the cost of sacrificing future pension benefits because” but did not provide a reason where requested.

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Mrs C was then asked about control and flexibility of pension funds: “Company pension schemes often have strict rules that state exactly how pension benefits are to be paid. These rules do not usually provide flexibility to take account of your individual circumstances. In addition, you will have little or no control over the way your pension fund is invested. I would prefer to move my pension to an individual plan which is under my control.” In response to this Mrs C was asked to select “yes” or “no” and she selected “yes”. Then, in relation to tax-free cash: “Tax-free cash sums at retirement Is the ability to take a tax-free lump sum at your normal retirement date important to you?” In response to this Mrs C was asked to select “yes” or “no” and she selected “yes”. Then, in relation to benefits in retirement: “Increases to your pension in retirement When you retire, increases to your pension may be included automatically, depending on the type of arrangement. However, some arrangements may allow you at least some choice in the matter. Do you think you will want your pension to increase in retirement to provide some protection against inflation?” In response to this Mrs C was asked to select “yes” or “no” and she selected “yes”. The suitability report JLT’s suitability report is dated 9 June 2010. At the outset this noted: “Introduction - Although the cost of our advice to you is being met by [name of former employer] the advice that we provide is confidential, independent and specific to your circumstances. Scope of Advice - Our advice is limited to your membership of the [name of the DB scheme] and your option to either remain a member of the Plan or transfer your pension benefits to another arrangement. Your Current Objectives and Circumstances - We have relied upon the information provided by you in the Fact Find you completed on 11/05/2010." JLT’s advice was summarised as follows: "Our overall conclusions, the reasons for which are detailed later within this report, are that you should not transfer because of the following reasons: • The required investment return, at your normal retirement age of 65, is between 6.6% and 7.2% per annum which is greater than the 6.4% Critical Yield Threshold Value per annum we would recommend given your Cautious attitude to investment risk and term to retirement.

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• The required investment return, at your preferred early retirement age of 60, is between 6.8% and 7.5% per annum which is greater than the 6.4% Critical Yield Threshold Value per annum we would recommend given your Cautious attitude to investment risk and term to retirement. • Transferring may provide a lower level of tax free cash at retirement which is important to you. However, this does not meet your preference to move your pension to an individual plan under your control. Nor does it meet your preference for a cash sum now, although you have not indicated why you require this cash sum. If you take the cash sum instead of re- investing it in your pension then the investment returns required are 7.2% per annum to age 65 or 7.5% per annum to age 60. You will therefore receive a lower pension in retirement than you would have received if you had remained in the Plan or invested the enhancement. If you decide to take the cash then you should plan to make increased pension contributions in the future to make up this shortfall. However, in some circumstances you may feel that it is more important to have the cash now rather than in the future. If you decide to transfer your benefits the Trustees will not allow you back into the Plan. The Trustees have confirmed that you are unable to transfer benefits to the DC 2007 section of the [name of scheme]." The report describes the features of the DB scheme and personal pension plans in general terms. The Transfer Value Analysis (‘TVAS’) is described in generic terms. The critical yields calculated on the basis of the different options available to Mrs C are set out and it’s noted again that they are “above the limits that we can currently accept as a reasonable target for a Cautious risk investment." And that: “Therefore, we would not recommend a transfer to a Stakeholder/Personal Pension Plan based purely on the financial results of Critical Yield calculations. Again we would stress that all these figures are based on assumptions, which must be met exactly to make these Critical Yields accurate." JLT’s recommendation is reiterated: “We are recommending that you remain a member of the DB Section of the Plan if it is your intention to draw benefits either at your normal retirement age or take early retirement. This recommendation is based upon our understanding of your circumstances as detailed above, your attitude to investment risk, the term of the potential investment and the indicated Critical Yield that is needed to match your DB Plan benefits. You will remain entitled to ask for a transfer value from the Plan at any time up to one year before your Normal Retirement Age although no enhancement or cash sum will be payable. We will contact you to discuss our recommendation with you."

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Whilst the suitability report notes that it would be followed up by a discussion with Mrs C about the recommendation, we haven’t been provided any record of such a discussion having taken place. An acknowledgement slip was enclosed with the report (contents set out below). The acknowledgement slip was signed and dated by Mrs C on 16 June 2010, this set out that: “I confirm that I have read and understood your transfer report dated 08/06/2010 in relation to my benefits within the Defined Benefit (DB) Section of the [name of DB scheme] and’ Please delete as applicable a) Confirm that I wish to retain my benefits within the [name of DB scheme] Pension Plan [deleted] b) Having read the report and JLT’s recommendation to remain in the [name of DB scheme] Pension Plan I nevertheless with to transfer my benefits away from the DB Section of the Plan against this advice. [selected] I wish to take this course of action because (please state your reasons for wanting to transfer):” This was followed by a handwritten note: “only if my option of a cash sum £1,966.30 (net of income tax and NI) is still available” Following receipt of this, JLT issued a letter on 22 June 2010. The letter acknowledged receipt of Mrs C’s instruction to proceed with the transfer even though this was contrary to JLT’s recommendation. The letter set out that: “On your acknowledgement slip dated 16 June 2010 that you returned to us, you advised us that you wanted to take this course of action because you would like to take advantage of the cash offer.” And “Please note that this request will be processed on an insistent client basis which means that JLT have acted on your explicit request to make a transfer and have only provided advice on a suitable product in which to invest the transfer value. The implications therefore of your decision to transfer from the Fund will be your responsibility. As a result of transacting business in this way you may be giving up some rights that are afforded to you by our Regulator, the Financial Services Authority, should this transaction subsequently prove to be inappropriate and you wish to seek recompense.” Some of the risks involved with the transfer are explained in general terms. JLT then sets out its recommendations on investing the transferred funds. Background to the complaint Mrs C complained to JLT about the advice she received from it in 2010. JLT issued its final response letter on 14 March 2025, explaining why it didn’t uphold her complaint. Unhappy with its response, Mrs C referred her complaint to our service.

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One of our investigators reviewed Mrs C’s complaint and concluded that it should be upheld. JLT disagreed with the outcome reached and made further submissions. JLT pointed to what it considers to be a similar case where an ombudsman concluded that the complainant had been insistent on transferring and didn’t uphold the complaint. And, highlighted that it would expect the ombudsman to be consistent in respect of this issue. Our investigator considered the submissions made but they weren’t minded to change their view of the complaint. They explained that each complaint is considered on its own merits and that the circumstances in the complaint the business had referred to were vastly different to those in Mrs C’s complaint. Because agreement couldn’t be reached, this complaint has been passed to me for review. What I’ve decided – and why I’ve considered all the available evidence and arguments to decide what’s fair and reasonable in the circumstances of this complaint. Having done so, I’ve reached the same conclusion as the investigator and for broadly the same reasons. The parties to this complaint have provided detailed submissions to support their respective positions. I’m grateful to them for taking the time to do so. I’ve considered these submissions in their entirety. However, I trust that they will not take the fact that my decision focuses on what I consider to be the central issues as a discourtesy. The purpose of this decision is not to address every point raised in detail, but to set out my findings, on what I consider to be the main points, and reasons for reaching them. Where the evidence is incomplete, inconclusive, or contradictory (as some of it is here), I reach my decision on the balance of probabilities – in other words, what I consider is more likely than not to have happened in light of the available evidence and the wider circumstances. It’s my role to decide if the business (in this case JLT) has acted fairly and reasonably in respect of the individual circumstances of the complaint made and – if I find that the business has not done so – award appropriate redress for any material loss or distress and inconvenience suffered by the complainant, Mrs C, as a result of this. When considering what is fair and reasonable in the circumstances, I need to take account of relevant law and regulations, regulator’s rules, guidance and standards, codes of practice and, where appropriate, what I consider to have been good industry practice at the relevant time. Ultimately, I’m required to make a decision that I consider to be fair and reasonable in all the circumstances of the case. Relevant considerations In relation to the activity complained about, at the time of the advice – in accordance with its regulatory obligations under the Principles for Businesses (‘PRIN’) and the Conduct of Business Sourcebook (‘COBS’) – JLT, amongst other things, had to act in its client’s best interests (PRIN 2.1.1R (6), COBS 2.1.1R), and give suitable advice (PRIN 2.1.1 (9), COBS 9.2.1R, COBS 9.2.2R) that was in accordance with COBS 19 relating specifically to DB pension transfers. This includes COBS 19.1.2 which said (at the time):

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“A firm must: (1) compare the benefits likely (on reasonable assumptions) to be paid under a defined benefits pension scheme with the benefits afforded by a personal pension scheme or stakeholder pension scheme, before it advises a retail client to transfer out of a defined benefits pension scheme; (2) ensure that that comparison includes enough information for the client to be able to make an informed decision; (3) give the client a copy of the comparison, drawing the client's attention to the factors that do and do not support the firm's advice, no later than when the key features document is provided; and (4) take reasonable steps to ensure that the client understands the firm's comparison and its advice.” And COBS 19.1.6G which said (at the time): “When advising a retail client who is, or is eligible to be, a member of a defined benefits occupational pension scheme whether to transfer or opt-out, a firm should start by assuming that a transfer or opt-out will not be suitable. A firm should only then consider a transfer or opt-out to be suitable if it can clearly demonstrate, on contemporary evidence, that the transfer or opt-out is in the client's best interests.” Also of relevance here is PRIN 2.1.1 (7): A firm must pay due regard to the information needs of its clients, and communicate information to them in a way which is clear, fair and not misleading. The above isn’t an exhaustive list of the rules and regulations which applied at the time of the advice but provides useful context for my assessment of JLT's actions here. The regulator undertook a review of advice on pension transfers involving enhanced transfer values, the findings of which were published in July 2014, the scope of the review covered advice provided between 2008 and 2012. I’ve set out below what I consider to be some relevant sections of the report. “We found that in the majority of cases the employers met the cost of the advice. Limited budgets provided by the employers, and the numbers of employees advised in a relatively short time, meant that the advice was often ‘process driven’, creating a risk that not all the members’ circumstances were considered in all cases. This also meant that advice was generally ‘limited scope’ and solely in respect of whether to take the ETV offer. While in principle it is possible to limit the scope of advice, given the complexity of ETV advice in this review we saw specific examples where placing limits on the scope of advice became a driver of unfair customer outcomes. Drivers of suitability failings included: • generic templates which were inadequately ‘tailored’ so the advice did not reflect specific member circumstances or give sufficient priority to the members’ own requirements; • advice where the outcome focused solely on critical yield analysis without full consideration of wider member circumstances; • not establishing adequately the level of risk a member is willing and able to take;

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• fund recommendations which did not match the assessed risk profile of the member; • the use of default receiving schemes (in some cases with uncompetitive charging structures) and limited consideration of the suitability of a member’s other existing pension arrangements; and • limited consideration of the tax and in a small number of cases ‘means tested benefit’ implications of accepting the offer.” And “Where members were insistent and took the enhancement as cash, the case files showed that only a small minority of the financial advisers considered alternative options to accepting a transfer, which may not be in the members’ long term interests, solely to gain access to cash. While this advice would typically be outside the ‘limited scope’ of the advice given (as the engagement typically would be to cover pension advice), when the availability of immediate cash was the sole reason for making a transfer it would have been relatively straightforward to highlight this matter to the member.” In relation to information gathering: “Our rules require that, when making a personal recommendation or managing their investments, a firm must obtain the necessary information regarding the client’s: • knowledge and experience in the investment field relevant to the specific type of designated investment or service; • financial situation; and • investment objectives; so as to enable the firm to make the recommendation, or take the decision, which is suitable for them.” In relation to the language of the recommendation the FCA commented: “The clarity of financial advisers’ recommendations varied considerably across the review population. There were examples of very clear recommendations but also examples of weak and ambiguous wording. For example wording included phrases such as ‘the transfer will not be more appropriate’ or ‘the transfer may not be appropriate”. And the following examples of poor practice were highlighted: “Poor Practice • Template paragraphs were used in the personal recommendation, which did not relate to the member’s specific circumstances. • The language used to describe the recommendation left the member to decide between various options. For example, the suitability report recommended that the member should stay in the scheme, but that, the member should transfer if any other objectives were of greater importance to the member than maximising their income at retirement.” In relation to insistent members the following example of good practice was provided:

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“Where members acted on an insistent basis, and the key driver for this was identified as the cash enhancement, the financial adviser explored the members’ real need for the cash (and, if driven by the need for debt repayment, considered alternative means of repaying debt).” I’ve carefully considered what happened in this case – within the context of Mrs C’s complaint – in light of JLT’s regulatory obligations including the relevant considerations set out above. It is not in dispute that transferring her DB scheme benefits wasn’t suitable for Mrs C, so I haven’t gone into detail as to the reasons for this here. But, for the avoidance of doubt, I don’t think that transferring her DB scheme benefits was suitable for Mrs C. Taking into account her circumstances and attitude to risk, I think there was a significant risk that Mrs C would be worse off in retirement as a result of transferring and I’m not persuaded – by anything recorded at the time of the advice – that there was any other justification for proceeding with the transfer in spite of this in this case. The process followed Based on the available evidence, there appears to have been limited interaction between Mrs C and JLT. Mrs C completed the fact-find on 11 May 2020, JLT’s suitability report was issued on 9 June 2010, Mrs C signed the acknowledgement slip confirming she wanted to proceed with the transfer against advice on 16 June 2010 and JLT issued it suitability report on how Mrs C’s transferred monies should be invested on 22 June 2010. So, things moved very quickly after JLT’s first suitability report had been issued. Limited information was gathered about Mrs C’s circumstances. The fact-finding process didn’t, for example, gather details of income versus expenditure at the time of the advice or details of Mrs C’s income needs in retirement. Whilst the scope of JLT’s advice was limited, it was still required to gather the necessary information to enable it to provide suitable advice. Given the nature of the advice being given here, I’m not persuaded that the necessary information – so as to enable JLT to give suitable advice – was gathered. The suitability of JLT’s advice The outcome of the advice was that JLT didn’t recommend that Mrs C transfer her benefits from the DB scheme, and I agree that that is the correct outcome. However, I have a number of concerns about the clarity and content of the suitability report issued on 9 June 2010. I think the report fails to sufficiently highlight the benefits of the DB scheme, much of the report is generic and fails to engage with Mrs C’s individual circumstances. The report focuses heavily on the critical yield without providing context to this in monetary terms. Whilst some of this information is included in the TVAS, this was a lengthy and technical document and I think that a clear comparison of what Mrs C was giving up and the likely impact on her retirement provision against the gain of the cash lump sum, should have been drawn out in the recommendation letter. The report cites Mrs C’s “objectives” but I think that JLT failed to establish that these were actually of importance to Mrs C, And, if these were of importance, why this was in light of Mrs C’s actual circumstances such that JLT could meaningfully engage with these objectives and ensure that it was giving suitable advice. The “objectives” were obtained by means of the fact-finding process where – as set out earlier in this decision – Mrs C was asked questions and, if Mrs C answered in the positive, then these were apparently viewed as her objectives. For example, the following statement was posed to Mrs C:

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“Company pension schemes often have strict rules that state exactly how pension benefits are to be paid. These rules do not usually provide flexibility to take account of your individual circumstances. In addition, you will have little or no control over the way your pension fund is invested. I would prefer to move my pension to an individual plan which is under my control.” In response to this Mrs C was asked to select “yes” or “no” and she selected “yes”. I don’t think that Mrs C answering in the positive here – particularly given how the statement is phrased – is indicative of this being an objective of hers. More broadly, I don’t think that this in isolation is an effective way to establish a client’s objectives which were then used to inform advice on a transaction of significant importance given Mrs C’s circumstances. JLT’s advice was summarised as follows: "Our overall conclusions, the reasons for which are detailed later within this report, are that you should not transfer because of the following reasons: • The required investment return, at your normal retirement age of 65, is between 6.6% and 7.2% per annum which is greater than the 6.4% Critical Yield Threshold Value per annum we would recommend given your Cautious attitude to investment risk and term to retirement. • The required investment return, at your preferred early retirement age of 60, is between 6.8% and 7.5% per annum which is greater than the 6.4% Critical Yield Threshold Value per annum we would recommend given your Cautious attitude to investment risk and term to retirement. • Transferring may provide a lower level of tax free cash at retirement which is important to you. However, this does not meet your preference to move your pension to an individual plan under your control. Nor does it meet your preference for a cash sum now, although you have not indicated why you require this cash sum. If you take the cash sum instead of re- investing it in your pension then the investment returns required are 7.2% per annum to age 65 or 7.5% per annum to age 60. You will therefore receive a lower pension in retirement than you would have received if you had remained in the Plan or invested the enhancement. If you decide to take the cash then you should plan to make increased pension contributions in the future to make up this shortfall. However, in some circumstances you may feel that it is more important to have the cash now rather than in the future. If you decide to transfer your benefits the Trustees will not allow you back into the Plan. The Trustees have confirmed that you are unable to transfer benefits to the DC 2007 section of the [name of scheme]." I think this would reasonably be confusing to Mrs C as JLT was, in effect, saying that it recommended that she didn’t transfer but that this recommendation didn’t meet her objectives. JLT also references here the possibility of Mrs C proceeding with the transfer, this is repeated elsewhere in the report. It’s also repeated in the acknowledgement slip enclosed with the report, by way of which Mrs C had to respond to the report, she was invited to select one of two options one of which was to proceed with the transfer against JLT’s advice.

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Advisers are generally required to communicate with their clients in a way that is clear, fair and not misleading. This requirement of course extends to the provision – or setting out – of its advice. This is of particular importance, I think, in a situation like this where the advice relates to a complex transaction – the ins and outs of which is likely to be challenging to understand for an inexperienced retail investor – and where there is a cash lump sum available that is likely to be attractive to most people. Advisers are also required to act in their client’s best interests. I think that JLT failed to meet these standards – amongst others – in its provision of pension transfer advice to Mrs C. What would Mrs C have done but for JLT’s failings Although there were flaws in the advice and process followed, JLT did make Mrs C aware that a transfer was against its advice. And this message was repeated in letters following the suitability report. Mrs C did have some liabilities recorded in the fact-find, including an outstanding mortgage of £81,000 and a car loan amounting to £6,500. Both the mortgage and car loan were also listed on Mrs C’s husband’s fact-find, so I think these were jointly held liabilities and I haven’t seen any indication that Mrs C was in financial difficulty or was unable to keep up with repayments on these at the time. Taking everything into account if JLT, a professional adviser who she had been referred to for advice, had given a thorough and fully reasoned explanation as to why a transfer wasn’t in Mrs C’s best interests in unambiguous terms, with information to show, from a monetary perspective, the impact the transfer could have on her retirement provisions in comparison to the incentive offered – I think that advice would have carried significantly more weight than the advice JLT actually provided to Mrs C. And, bearing in mind that this pension was expected to form the majority of her retirement provisions, if this fuller explanation had been provided, and without the prospect of this immediately being disregarded being introduced by JLT, I think she would have accepted that advice. So, I think it is more likely than not that she would not have insisted on a transfer and would have remained a member of the DB scheme. Overall, I don’t think that JLT took adequate steps to ensure that its advice was suitable, and I think that the process followed was flawed. I think that if Mrs C had been given clear and comprehensive advice that followed a process that was in accordance with the applicable regulatory standards then it is more likely than not that she would not have transferred against this advice. I uphold Mrs C’s complaint. I’ve set out below how JLT should go about putting things right. Putting things right A fair and reasonable outcome would be for JLT to put Mrs C, as far as possible, into the position she would now be in but for the unsuitable advice and process failings. I consider she would have likely remained in the occupational scheme. JLT should therefore undertake a redress calculation in line with the rules for calculating redress for non-compliant pension transfer advice, as detailed in Policy Statement PS22/13 and set out in the regulator’s handbook in DISP App 4.

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For clarity, Mrs C has not yet retired, and she has no plans to do so at present. So, compensation should be based on the scheme’s normal retirement age, as per the usual assumptions in the FCA's guidance. This calculation should be carried out using the most recent financial assumptions in line with PS22/13 and DISP App 4. In accordance with the regulator’s expectations, the calculation should be undertaken or submitted to an appropriate provider promptly following receipt of notification of Mrs C’s acceptance of my final decision. If the redress calculation demonstrates a loss, as explained in PS22/13 and set out in DISP App 4, JLT should: • calculate and offer Mrs C redress as a cash lump sum payment, • explain to Mrs C before starting the redress calculation that: o redress will be calculated on the basis that it will be invested prudently (in line with the cautious investment return assumption used in the calculation), and o a straightforward way to invest the redress prudently is to use it to augment the current defined contribution pension • offer to calculate how much of any redress Mrs C receives could be used to augment the pension rather than receiving it all as a cash lump sum, • if Mrs C accepts JLT’s offer to calculate how much of the redress could be augmented, request the necessary information and not charge Mrs C for the calculation, even if she ultimately decides not to have any of the redress augmented, and • take a prudent approach when calculating how much redress could be augmented, given the inherent uncertainty around Mrs C’s end of year tax position. Redress paid directly to Mrs C as a cash lump sum in respect of a future loss includes compensation in respect of benefits that would otherwise have provided a taxable income. So, in line with DISP App 4.3.31G(3), JLT may make a notional deduction to allow for income tax that would otherwise have been paid. Mrs C’s likely income tax rate in retirement is presumed to be 20%. In line with DISP App 4.3.31G(1) this notional reduction may not be applied to any element of lost tax-free cash. My final decision I uphold Mrs C’s complaint. My final decision is that JLT Wealth Management Limited should pay the amount calculated as set out above. Under the rules of the Financial Ombudsman Service, I’m required to ask Mrs C to accept or reject my decision before 28 April 2026. Nicola Curnow Ombudsman

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