Quilter · DRN-6201755

The complaint Mr G’s complaint is about his Quilter pension, which started in 2017 following advice from Quilter’s Appointed Representative (“AR”), BCJ Financial Planning Limited (“BCJ”). His complaint is about the advice relating to the disclosure of fees and services, and lack of ongoing reviews relating to his pension. What happened Our investigator set out the background to the complaint in his letter of recommendation, for ease of reference I have included an amended copy of this below: Mr G met with BCJ (Quilter) because he needed advice to access his pension via flexible pension drawdown. He didn’t need access to his full pension nor required a fixed income from an annuity – he simply wanted to access his tax-free cash equivalent and draw an income each month to supplement his pension already in payment. A fact find was carried out, which confirmed his needs and objectives – he wanted to access his tax-free cash to reduce some of the mortgage and take a regular income. His existing providers didn’t allow him to make flexible-access drawdown, so he sought Quilter’s advice. A suitability letter (dated 19 October 2017) was sent to Mr G to outline the advice. Details about the charges were confirmed: “Charges We agreed at our meeting for this work BCJ will charge you 2.5%% of the transfer figure, which equates to £5509.40, this may vary if the transfer figures on the day are higher or lower. The amount will be deducted from the pension and paid to us by the provider.” The letter also confirmed no exit penalties were applicable. It stated: “As you can see from the table above, the fund value and transfer value of your plan(s) are the same, meaning that there is/ are no penalty/ies on transferring your fund(s) to an alternative provider.” In addition to the initial advice, Quilter discussed ongoing advice, and an ‘authority to proceed’ document was signed on 15 September 2017. It outlined the initial cost (2.5% of the switch value) and 0.85% per year Ongoing Adviser Charges (OAC). The level of service Mr G would receive, and the charges were confirmed in the suitability letter. It stated that Mr G would receive ongoing and regular reviews. “Regular Review …. We have agreed that you would like your plans to be reviewed on an annual basis. The costs of the Regular Review Service will be met by way of a deduction from your fund. For the services described above, an annual charge of 0.85% will be deducted

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each year. You should note that the rate is charged as a percentage of your funds’ value and as such the actual amounts payable will vary as the value of your fund fluctuates. For example, on a fund of £150,000 the charge would be £1,275.00 per annum. Please refer to your illustration for full details. In the event that I am not available to carry out the reviews with you, please contact BCJ Financial Planning Limited who will arrange for an alternative adviser to carry out the review with you.” The letter also confirmed that Mr G could switch off the ongoing service. It stated: “Cancellation of ongoing provider facilitated charge As outlined above, payment for the review service offered will be received by BCJ Financial Planning Limited for the foreseeable future from the provider. If however you no longer wish to receive this service you are at liberty to cancel this charge at any time and can do so by contacting the provider directly and confirming your wish for this payment to cease. Please be aware that should you do so I will no longer be in a position to review your affairs as agreed.” In July 2018, Mr G met with Quilter to discuss his pension needs. He found out that he had another pension (with Aviva) and he wanted to access his tax-free cash for that pension too – for the same reason as before – to reduce his mortgage balance. Quilter carried out his request and followed the same advice process as September 2017. In November 2018, and in line with ongoing advice and servicing, Mr G met with Quilter to discuss his pension needs. The outcome of the review led to no changes. A suitability letter dated 15 November 2018 confirmed: “I have reviewed both your objectives and your investment funds and I can confirm that the current investment strategy meets your objectives so there is no reason to change any of my previous recommendations. Your current investment funds are still aligned to the risk profile for these objectives. It has been a turbulent year and therefore the returns have not been as I would have expected hoverer, I do believe your funds have held up well considering. The fact it is the first year which is always top heavy with charges, it is bordering impossible to give a true reflection of the overall picture but please be assured I am monitoring this all the time and at the moment there is nowhere to hide.” In January 2020, and in line with ongoing advice and servicing, Mr G met with Quilter to discuss his pension needs. A fact find assessment was carried out and the outcome of the review led to no changes. A suitability letter dated 24 January 2020 confirmed: “Recommended Actions I have reviewed both your objectives and your investment funds and I can confirm that the current investment strategy meets your objectives so there is no reason to change any of my previous recommendations. Your current investment funds are still aligned to the risk profile for this objective.” Mr G also signed a new ‘Authority to proceed’, and agreed for Quilter to continue to deduct a fee of 0.85% per annum for the service. In January 2021, Quilter wrote to Mr G confirming that his pension remained suitable for his needs and he could contact them if he needed advice due to any changes in circumstances that may require further advice.

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In June 2021, Mr G met with Quilter to discuss his pension needs. A fact find assessment was carried out and the outcome of the review led to advice being provided to access a further cash lump sum to supplement Mr G’s pension. In January 2022, Quilter wrote to Mr G confirming that his pension remained suitable for his initial needs and objectives he could contact them if he needed advice due to changes in circumstances. The suitability letter dated 11 January 2022 stated: “On the assumption nothing has changed in these two areas, the current plans and funds are still fit for their original purpose and continue to be suitable. If you feel that there have been material changes though, please let us know so we can provide information and advice as to what the impacts may mean, with the result that you can feel confident about your current arrangements or will be informed as to what you should or might do next.” In May 2023, Mr G met with Quilter to discuss his pension needs. A fact find assessment was carried out and the outcome led to no changes to Mr G’s pension. The suitability letter (dated 9 May 2023) confirmed: “Statement of Continued Suitability At the meeting, you confirmed that there have been no key changes since we last met. In view of this, I believe there have been no material changes that could affect the suitability of your plans and so I am happy to confirm that our original advice and your plans continues to be suitable for your needs.” In May 2024, Mr G met with Quilter to discuss his pension needs. A fact find assessment was carried out and the outcome led to no changes to Mr G’s pension. The outcome of the review also led to Mr G’s decision to disengage with BCJ and Quilter as his financial adviser. A letter dated 1 May 2024 confirmed: “Dear Mr G YOUR ONGOING SERVICE AND ASSOCIATED FEES HAVE STOPPED Further to my review of your Quilter pension today, please accept this letter as confirmation of your decision to end my appointment as your Financial Adviser.” “I will no longer assess the suitability of your holdings. This also means the end of our ongoing service arrangement and associated charges.” On behalf Mr G, Pacific Legal (“PL”) raised the following complaint points on 4 September 2024. They said: • The level of advice that Mr G received was not explained in full prior to accepting the charges for any ongoing service. • Mr G was wrongfully charged for an annual service for work that has not been carried out to the agreed service level to justify the fees in direct breach of The Markets in Financial Instruments Directive (MIFID). • PL believe that the correct checks and advice were not carried out to determine whether any products held by Mr G were suitable for his financial situation on an annual basis in direct breach of (MIFID). • Mr G was charged excessive exit fees which were unfair and to their financial detriment. • As a result of Quilter’s failure to carry out annual reviews on Mr G’s investment, he has suffered consequential financial loss.

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Quilter responded to Mr Gs complaint on 31 March 2025. They didn’t uphold the complaint. They said: • Mr G raised his complaint too late. • Regarding the advice on disclosure of fees and charges, their records show that the initial advice Mr G’s received took place in 2017 which is more than six years ago, and they believe Mr G was aware or ought reasonably to have been aware, that he had cause to complain more than three years ago about the complaint points he has raised. • In any case, Quilter carried out an assessment on the disclosure of fees, and they’re satisfied these were agreed and provided to Mr G. • Regarding ongoing annual reviews, Mr G received a review in 2022, as such, he had reasonable cause for complaint about any missed reviews prior to this date. It is Quilter’s view that Mr G’s complaint regarding annual reviews prior to 4 February 2022 is time barred. • All reviews post February 2022 took place as expected. Unhappy with the outcome, Mr G referred his complaint to our service for an independent review. The investigator looked into matters, he ascertained that all reviews had been carried out within six years of the initial complaint so were in time. He wasn’t persuaded Mr G had any cause to complain any earlier than when he spoke to PL and then complained to Quilter (in September 2024). However, he didn’t uphold the complaint as he felt Quilter had set out everything it needed to do and had carried out all the reviews required of it. In response Pacific legal said: The document provided for 2021 is effectively a pro forma document, it is not evidence that any form of review took place, and we do not believe that it could be considered otherwise. Between January 2020 and June 2021 there does not appear to have been any communication between our client and the advisor. Indeed, the advisor suggests so in his personal detail notes relating to the pension withdrawal advice. A proper review requires a more comprehensive process, involving client engagement and documented evidence of suitability assessments. Simply sending a document, without a meeting or active two-way communication to discuss changes in the client's circumstances, objectives, or risk tolerance, does not meet regulatory standards. Whilst we do not accept the January 2021 document as evidence of a review for 2021, we do however accept the June 2021 document as evidence of a review for that year. Unlike the June 2021 review, there does not appear to be any such evidence of a review in 2022, only the same pro-forma type document sent in January 2022, which we do not accept as sufficient evidence that a review took place. On that basis and after further consideration we require the following-: 1. A refund for 2022 as no review appears to have been provided in that year and not until May 2023, 5 months after the advisor stated that a review was arranged. In the 2022 suitability document it infers a possible “additional charge” to our

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client if “yes” is answered to any of the questions, this for a service he is already paying for as agreed when the service commenced. This is not acceptable and indeed likely to lead the client to consider not engaging further. There is also reference to the next review being a “comprehensive review of our client’s circumstances”. Our client has paid for a comprehensive service and that is what should have been offered and provided every year. 2. As our client’s agreement commenced in September 2017, by the time that September 2024 was reached, our client should have received around 7 reviews. They received reviews in November 2018, January 2020, June 2021, May 2023 and May 2024. In effect they have paid for 7 years and received only 5 reviews. 5 reviews should involve making payments for 5 years, not 7 years. We therefore require a refund for the delay in providing the reviews, which we believe, based on the detail provided, would be an additional 8 months over and above the refund required for 2022 (12 months). The investigator wasn’t prepared to change his view on matters and so the case was passed for me to decide. 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. The only issues left in dispute are the review of 2022 and the timings of the reviews. In the January 2021 review which covered the year of 2020, Quilter sent a letter of ongoing suitability to Mr G (in the previous years, letters had been sent after a meeting had occurred) in which it set out that unless his circumstances had changed, it felt the current position with his investments was still suitable for him. It said: ‘On the assumption nothing has changed in these two areas, the current plans and funds are still fit for their original purpose and continue to be suitable. If you feel that there have been material changes though, please let us know so we can provide information and advice as to what the impacts may mean, with the result that you can feel confident about your current arrangements or will be informed as to what you should or might do next.’ It set out a table of what Mr G needed to consider and if any of these things was relevant to contact them to check out if it affects his plans. It then said: ‘If you have ticked yes to any of the above, please contact us to check how that impacts on your current plans. There may be an additional charge for this service. Alternatively, we have a review scheduled for January 2022 where we will conduct a comprehensive review of your circumstances to check that the current planning is aligned to your goals. As you know, we are committed to helping you achieve your financial objectives via an ongoing service that we hope you truly value. Part of that service is to inform you of the progress of your plans towards achieving your goals.’ It said towards the end of the letter: ‘The ongoing fee for my services, which includes a regular review, are to be met by way of a deduction from your investment fund which is an annual fee of 0.85%, deducted each year. You should note that as this is a percentage of your fund value, the actual amounts payable

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will vary as the value of your fund fluctuates. On a fund of £170,000 this equates to an annual fee of £1,445. This deduction can be cancelled at any time by contacting the product provider should you no longer wish to receive a review service from me. However, as we will not be in regular contact, I will be unable to assess the continued suitability of your holdings and will not therefore be sending you an annual Statement of Continued Suitability. Should you wish to discuss the detail of this letter or the provider issued statements in advance of your next review, please do not hesitate to contact me.’ In June 2021 Mr G got in touch with the adviser because his circumstances had changed and he wished to make a withdrawal as he needed money for home improvements. The adviser carried out a comprehensive review and issued a suitability report. Within this it said: ‘We agreed that as you are paying me an ongoing service fee there will be no further charge for this advice’. In January 2022, the same document which is referred to above as the January review in 2021, was sent to Mr G. The next meeting that then happened was in May 2023, a change of adviser had occurred and she says ‘It was great to see you on Tuesday 2nd May 2023 and as promised here is a summary of our meeting.’ And ‘At the meeting, you confirmed that there have been no key changes since we last met. In view of this, I believe there have been no material changes that could affect the suitability of your plans and so I am happy to confirm that our original advice and your plans continues to be suitable for your needs.’ A lengthy review report is then issued as Mr G has said his circumstances are such that he was considering taking his benefits. So its clear there has been some previous correspondence between the two (there is no explanation of the change or introduction by the adviser – I think it’s fair to say at this point they are already known to each other) and that we haven’t been provided with all the evidence of communications between both parties. By the time the next review was carried out by the adviser, in May 2024 – (it appears with the change of adviser the review point has moved from January to May) Mr G had transferred away his funds in September 2023 and the adviser then confirmed this in the letter of disengagement. Looking at the FCA’s most recent guidance it says: ‘The data we were provided with shows us that in 83% of the cases where suitability reviews were promised they were delivered. In a further 15% of cases, clients had either declined the review or not engaged with the firm’s request for the information needed to conduct a review. We are most concerned about the fewer than 2% of cases where firms reported they had made no effort to deliver the suitability review to clients. In these cases, it is likely redress will be due. Where a firm has been ready, willing and able to provide suitability reviews, but a client has consciously declined the service in any given year, we consider it less likely that redress will need to be paid. Where the client has declined the service over a number of years, firms should discuss with the client whether continuing with the service is still in their best interest. We also recognise that there may be circumstances where firms have made reasonable and proportionate attempts to engage with clients to conduct suitability reviews without success.

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We generally expect that firms will need to have some engagement with their client in order to carry out a review. In these situations we expect redress to be less likely, however, a firm should have considered whether an ongoing service is in a client’s best interest if they’ve persistently not engaged. Good practice Through our review, we found good practice, such as: • Client agreements and relevant consumer communications that clearly set out the nature and timing of the ongoing service. • Effective systems and adequate resources to ensure suitability reviews were scheduled and offered as agreed. • Policies in place to stop collecting fees where a client had not engaged with the service for a period of time. • Appropriate record-keeping to make sure firms can evidence delivery of their services where provided. • Where suitability reviews were provided, ensuring: o Clients’ circumstances, objectives, attitude to risk and capacity for loss were up to date. o Risk profiles, charges and performance of existing investments were reviewed and recorded to make sure they remained suitable or identified whether an alternative recommendation was required. o Communications to clients recorded the outcome of a review being a personal recommendation. Poor practice We found poor practices, such as: • Client contracts without a clear description of the services to enable the customer to understand what will be delivered throughout the relationship. • Ineffective processes, controls and monitoring to make sure services were delivered in line with contractual obligations, and that advice provided met regulatory requirements. • Insufficient management information to allow senior management to have adequate oversight of the services. • Inadequate record-keeping to make sure firms can evidence delivery of their services What Quilter did for the annual reviews in Jan 2021/2022 doesn’t exactly meet the relevant parts of the best practice set out above. But I don’t think it meets the poor practices either. I think what Quilter did with the letter sits somewhat in a grey area in terms of the FCA’s guidance. So, alongside the guidance I’ve considered the particular circumstances of this case to decide what is fair and reasonable and whether a refund is due. The FCA says it was most concerned where firms had made no effort to deliver the

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suitability report, I don’t think this is the case here. Quilter here did deliver a suitability report of sorts but without meeting with Mr G. It relied on its knowledge of his investments that and on the assumption Mr G’s circumstances hadn’t changed to say his investments remained suitable. But crucially it did give Mr G the option to correct that and told him the factors that could change this position – and the option to discuss what if anything this could mean for him. In previous years they had met but with the same ultimate outcome, that the investments remained suitable for him. The FCA says its likely no redress will be due where a firm ‘has been ready, willing and able to provide suitability reviews, but a client has consciously declined the service in any given year,’. In June 2021, following the letter of continued suitability sent in January 2021, Mr G did contact the adviser and a more complete review was carried out with advice given to make a withdrawal and no charge levied (which would usually be chargeable) due to the ongoing advice agreement. So, I think it’s fair to say Quilter was ready, willing and able to provide reviews in 2021 and I think the same would have applied in 2022 had Mr G asked for it. I don’t think it would be fair to say Mr G had consciously declined a review in 2022 but he certainly decided following the receipt of the letter that he didn’t require a meeting and that his circumstances hadn’t changed. The opportunity was there to discuss his circumstances with the adviser. I don’t agree because there was the mention of the chance of an additional charge, this would have put Mr G off contacting Quilter, as he did contact Quilter in June 2021 following the same letter. And no extra charge was made. As I’ve said I don’t think this method is best practice, what Quilter did in other years where a meeting was carried out and a more substantial review document followed met the measures of good practice. But for whatever reason for these two years the adviser took a different approach, stating the investments remained suitable unless Mr G had had a change of circumstance. Within the January 2022 letter (and January 2021 letter) it was made clear what the review service was intended to achieve: When we provided financial advice to you, our commitment was to ensure your plans stayed on track to help hit your objectives. It is highly likely that the investments we set in place are still fit for your purposes, however, there are two key areas in your life that may impact this; Facts and Feelings: • Facts – these are details that logically may impact the suitability of your plans regarding the investment mix, the ownership and the tax shelters they are held in. • Feelings – the reasons and drivers behind the purpose of your investments can also impact the ongoing suitability. On the assumption nothing has changed in these two areas, the current plans and funds are still fit for their original purpose and continue to be suitable. If you feel that there have been material changes though, please let us know so we can provide information and advice as to what the impacts may mean, with the result that you can feel confident about your current arrangements or will be informed as to what you should or might do next.

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And what Mr G was paying for the service and that he could cancel at anytime: ‘The ongoing fee for my services, which includes a regular review, are to be met by way of a deduction from your investment fund which is an annual fee of 0.85%, deducted each year. You should note that as this is a percentage of your fund value, the actual amounts payable will vary as the value of your fund fluctuates. On a fund of £170,000 this equates to an annual fee of £1,445. This deduction can be cancelled at any time by contacting the product provider should you no longer wish to receive a review service from me. However, as we will not be in regular contact, I will be unable to assess the continued suitability of your holdings and will not therefore be sending you an annual Statement of Continued Suitability. Should you wish to discuss the detail of this letter or the provider issued statements in advance of your next review, please do not hesitate to contact me.’ As I’ve said, I don’t think this was particularly good practice but Mr G was clearly informed that this was his review unless he disagreed and had the opportunity to contact the adviser to discuss. And he was expressly told what he was paying for it and he could cancel the service at any time, so if he wasn’t happy with this approach he could have contacted the adviser or cancelled the agreement. But Mr G didn’t cancel the service until nearly two years later (and in that time he did receive a face-to-face meeting). He later disengaged when he presumably contacted a new adviser who transferred his plans elsewhere. I’ve also considered that when Mr G did contact the adviser following this letter being sent in January 2021, an advised recommendation was made without charge due to the ongoing service payments. I think that likely represented good value for Mr G. Mr G didn’t take up this same offer in January 2022 and it wasn’t until May 2023 – when the new adviser took on Mr G that he received the next annual review. The FCA said: ‘a firm should have considered whether an ongoing service is in a client’s best interest if they’ve persistently not engaged.’ I think it’s clear that the adviser felt in January 2021, likely following the previous review meetings with Mr G, that unless Mr G’s circumstances changed his investments would continue to meet his needs and would remain suitable. But Mr G then did request advice in June 2021 and had in essence only not engaged in 2022 and then in May 2023 had a review and requested a report on his retirement. So I don’t think it can be said Quilter should have considered it wasn’t in his best interests, as Mr G did have reasons on which to call on the expertise of the adviser. And he would have otherwise had to pay for this. Furthermore, every year the purpose of the review service was set out, the cost was set out and it was made clear he could cancel at any time. So it was easy for Mr G to work out whether he thought it was in his best interests. I don’t agree with Mr G’s representatives that he only received 5 out of 7 reviews that he should have been due. Mr G’s agreement started in September 2017, so that would necessitate a review covering the years 17-18 (done in November 18),18-19 (done in January 2020),19-20 (done in Jan 21 inc. June 21) ,20-21 (contentious Jan 22 review),21-22 (done in May 23) and 22-23 (due May 24), six reviews. Mr G disengaged in September 23, only four months after the last review – it was during the May 24 review process that the adviser realised Mr G had disengaged. I don’t think it is reasonable to expect the adviser would have been able to carry out the review for the final year as Mr G disengaged at the earliest point it could reasonably be expected a review could have been carried out (September). And in any event the evidence suggests the adviser did some work that year

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before realising Mr G had transferred away. We would usually like to see reviews carried out around the same time of year, as they are meant to be annual and I can see that Quilter did stick to this in 18,19,20,21 and in 2022, where reviews were carried out at around the same time of year. And then a change occurred in 2023 from the November – January time of year to May and with a new adviser. We don’t have either parties input on this but it seems on the balance of probabilities this was down to the change of adviser – and the evidence suggests they had already spoken prior to this. So I don’t think any redress is required for this change or delay in meeting. It isn’t always possible for a review to be carried out at a certain point in time and the change in adviser may have necessitated a change in the review period. I think the important thing here is the review was carried out even though later in the year. In conclusion, considering the guidance alongside what is fair and reasonable in the context of the whole period of the relationship, I don’t think a refund is due. In 2022 Quilter indirectly offered a review in the same format as the year before. In the year before Mr G then contacted Quilter for a review and received advice with no charge. Mr G was reminded every year that he could cancel at any time but chose not to. And later in 2023 Mr G received a review and a further report following his request to consider his retirement options, so I think he saw value in continuing with the ongoing service at this point. He was aware as he was in January 2021, that if his circumstances had changed, he could request a review on this basis and advice at no extra cost. Otherwise, he was aware it was the advisers view that his investment remained suitable. So, whilst Quilter’s practice in issuing a letter of ongoing suitability assuming nothing had changed and putting the onus on Mr G to request a review meeting over those two years doesn’t meet the bar for good practice, I don’t think it disadvantaged Mr G. And it was made clear to Mr G what his options were, he knew he could request a review as he did in 2021. And the evidence shows it was prepared to back the review letter up with work carried out for no extra charge. So, on balance and considering everything on a fair and reasonable basis, I’m not persuaded a refund of the 2022 review is required here. My final decision For the reasons explained, I do not uphold this complaint and make no award. Under the rules of the Financial Ombudsman Service, I’m required to ask Mr G to accept or reject my decision before 22 April 2026. Simon Hollingshead Ombudsman

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