Quilter Financial Services Limited · DRN-5732403

The complaint Mrs N, with the help of a professional representative, has complained that the advice she was given by an appointed representative (“AR”) of Quilter Financial Services Limited (“Quilter”) was unsuitable for her and that despite paying ongoing advice charges (“OAC”) the annual reviews have not always taken place. What happened In February and September 2016 Mrs N met with an adviser from Quilter during which time a fact find document was completed which recorded her circumstances as follows: • She was age 57 and in good health. She had no financial dependents. • She had recently separated from her husband. The sale of the matrimonial home had been agreed, but the sale was yet to complete. • She had been made redundant in November 2015 and was currently looking for employment. • She held around £1,000 as her emergency funds. • Her planned retirement age was 66. At the time she had the following pension arrangements in place: • A defined contribution pension with AIG Life valued at £81,500. • An individual personal pension plan with Friends Life valued around £37,000. A small exit penalty of around £18 applied. • A final salary pension providing income of £8,300 at age 65. • She believed she would be entitled to a full state pension at age 66. It appears that Mrs N met with the adviser because she needed to access some of her pension to cover the deposit on a new property and this was required as soon as possible. It was recorded that she didn’t want to draw an income and it was planned that the equity being released from the sale of a different property would be used to pay the rest of the purchase price of the new property without the need for a mortgage. During the fact finding process with the adviser Mrs N was assessed as having a Balanced attitude to risk. It was acknowledged that she didn’t want to see high levels of loss on her pension given she wasn’t employed and she had no other meaningful savings or investments. However she confirmed that she accepted and understood that some risk was needed in order to achieve some growth. Quilter’s Balanced risk investor profile was as follows: Balanced investors prefer not to take too much risk with their investments but will do so to an extent. They tend to prefer lower risk assets, but realise riskier investments are likely to give better longer-term returns. As a result, they realise that by taking a balanced level of risk the opportunity for increased returns is higher.

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Balanced investors typically have moderate levels of knowledge about financial matters, and they may have some experience of investments in riskier assets. Balanced investors can take some time to make up their mind on financial matters and can suffer from regret when decisions turn out badly. Risk attitude is only one factor in determining a suitable investment strategy. You must consider your ability to withstand short term losses, and your need to take risk to achieve your financial goals. On 24 October 2016 Quilter issued a suitability report setting out this recommendation to consolidate both her AIG and Friends Life pensions into an Old mutual Wealth Flexi-access drawdown plan to enable Mrs N to release the maximum tax-free cash. The adviser confirmed in the report that no guaranteed benefits would be lost on transfer and that the remaining 75% was to be invested in the Cicillium Balanced Fund. The suitability report set out various warnings about accepting the advice and explained amongst other things the disadvantages for accessing pensions early. Mrs N accepted the advice and the new plan was set up. In 2020 Mrs N transferred her pension elsewhere and disengaged from Quilter and its services. Mrs N then complained through her representatives in July 2024 about the initial advice given to her in 2016 and the lack of reviews. Quilter issued its final response letter on 31 October 2025 stating that it believed the complaint about the advice given in 2016 and any missed reviews before 2018 had been raised too late as they took place more than six years ago. With regards to the missed reviews from 2018 onwards Quilter said it had been unable to evidence that any annual reviews had taken place up to the point Mrs N had disengaged from Quilter and so offered to refund the relevant charges adjusted for growth using a medium risk benchmark. Mrs N wasn’t happy with Quilter’s response and so she brought her complaint to this Service where it was assessed by one of our investigators. He concluded that neither the suitability of the advice or any of the missed reviews had been brought outside of the required timescales so the merits of each issue could be considered by this Service. In terms of whether the advice was suitable for Mrs N he felt that it was. And in relation to the annual reviews, he endorsed the offer Quilter had made to refund the charges Mrs N had paid for the ongoing adviser service from 2018 onwards. But he also found that the missed review of 2017 should also be refunded. Quilter didn’t respond to the investigator’s assessment. So as no agreement could be reached the complaint has been passed to 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. I’ve taken into account relevant: law and regulations; regulatory rules; guidance and standards; codes of practice; and (where appropriate) what I consider to have been good industry practice at the relevant time. Where the evidence is incomplete or inconclusive, I’ve reached my decision

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based on the balance of probabilities – in other words, on what I think is more likely than not to have happened given the available evidence and wider circumstances. I have considered everything the parties have provided and said in making and responding to this complaint. However, our rules don't require me to address or respond to each and every point raised. We’re an alternative to the court not a substitute for it. As such my role is to decide how a complaint should be resolved with minimal formality. And I aim to present my conclusions in as clear and as concise a manner as I can. In doing so I focus on the key issues and the reasons that are crucial to my decision making. So, if there's something I haven’t mentioned, it isn’t because I’ve ignored it. It’s because I'm satisfied I don’t need to comment on it to be able to reach what I think is a fair and reasonable outcome in the circumstances of this complaint. Has the complaint been made too late As Quilter raised a time bar objection this is the first issue I must consider. The Financial Ombudsman Service isn’t free to consider every complaint that’s brought to us. We are governed by rules set by the Financial Conduct Authority’s (“FCA’s”) Handbook, the Dispute Resolution (“DISP”) Rules. They set out the complaints that we can (and can’t) consider and I have to strictly apply these rules. The specific DISP rule relevant for this complaint is DISP 2.8.2 R which sets out the following: “The Ombudsman cannot consider a complaint if the complainant refers it to the Financial Ombudsman Service: …….. (2) More than: (a) Six years after the event complained of; or (if later) (b) Three years from the date on which the complainant became aware (or ought reasonably to have become aware) that he had cause for complaint; Unless the complainant referred the complaint to the respondent or to the Ombudsman within that period and had written acknowledgement or some other record of the complaint being received; Unless: (3) in the view of the ombudsman, the failure to comply with the time limits in DISP 2.8.2 R or DISP 2.8.7 R was as a result of exceptional circumstances; ……. The rules don’t say that Mrs N needs to know exactly what’s gone wrong to bring a complaint – only that she needs to have a reasonable awareness something might have gone wrong. If a complaint is brought outside of the time limits set out in the rules, we’d only be able to consider it if Quilter has consented – which it hasn’t – or if the complaint was brought late due to exceptional circumstances. The FCA gives an example of exceptional circumstances as being incapacitated. The two complaint points that I must consider in regards to the time bar objection are those relating to the suitability of the advice given to Mrs N in 2016 and also whether she received the ongoing annual reviews that she was paying for.

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In terms of the suitability of the advice, Mrs N was given this in 2016 and she raised her complaint initially in July 2024. So, it’s clear that in this case the “event” i.e. the advice being complained about, took place more than six years before she raised the complaint. Therefore, as per the rules set out above, I must next consider when Mrs N became aware, or ought reasonably to have become aware, that she had cause to complain about the suitability of the advice and whether she complained within three years of this awareness. In its argument on this point Quilter hasn’t provided any evidence why it feels Mrs N knew or ought reasonably to have known that she had cause for complaint any earlier than the point at which she raised it in 2024. And I haven’t seen anything in the information provided to me that makes me think she ought to have realised there could be a problem with her investments, such a significant loss in value. So I see no reason why Mrs N could or should have known she had cause to complain about the suitability of the advice she received in 2016 any earlier than she actually did. Turning now to the issue of whether the complaint about the missed annual reviews has been brought too late, Quilter has said that Mrs N would have known or ought reasonably to have known if the reviews had not been carried out before 2018, but again, it hasn’t specified exactly when. Each annual review is an even in its own right so under the DISP rules set out above the last six years of reviews prior to the complaint being made in July 2024 automatically fall within time. So, I am satisfied that any missed reviews from July 2018 onwards can be considered by this Service. So, the review that I must focus on for this part of the decision is that of 2017 which is the first review that was due following the advice being given. The suitability letter which was produced following the meetings Quilter had with Mrs N is dated 24 October 2016 and this included a section entitled “Regular Review Service”. This explained that Quilter would review her plan each year and the annual cost for this was 0.5% of the value of her investments. It goes on to say that Quilter would contact Mrs N annually with a policy valuation and statement for review and that it was at this time for Mrs N to contact Quilter to arrange the review. So, the onus was put on Mrs N to arrange the review when prompted by receiving the relevant information. Therefore, as the 2017 review didn’t take place, I see no reason why Mrs N would have known Quilter had done anything wrong given it was for her to contact Quilter to arrange the review. Therefore, it follows that 2017 cannot be deemed to be the point of awareness of a cause for concern and that it was not until 2024 when she raised the complaint that she was made aware by her representative that she should have been receiving regular annual reviews at the initiation of Quilter rather than herself. Therefore, the missed review of 2017 also falls within the remit of this Service because I don’t think it has been brought out of time, with reference to the rules above. Suitability of the advice in 2016. In deciding whether the advice provided in 2016 was suitable for Mrs N it’s important to point out that my role is not to decide what the best or most perfect advice would have been for Mrs N, or any consumer. My role is to look at the advice and the recommendations given and decide whether, from the information in front of me, what was recommended was in line with the consumer’s needs and objectives at the time taking account of her personal and

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financial circumstances. So, while there may have been other options available to Mrs N at the time of the advice rather than switching her pension I can only look at the advice Mrs N accepted and assess the suitability of that – I cannot state or decide what else Mrs N should or could have done. As a regulated firm, Quilter and its appointed representatives had many rules and principles that it needed to adhere to when providing advice to Mrs N, namely the FCA handbook under the Conduct of Business Sourcebook (COBS) and Principles for Businesses (PRIN), as they were at the time of the advice. Furthermore, given the complaint concerns a switch of a pension I must also have in mind the relevant guidance provided by the FCA and its predecessor, the Financial Services Authority (“FSA”). And of particular relevance for this complaint is the report the FSA published in 2008 on the quality of advice on pension switching. This report identified four main areas where they considered advice to be unsuitable: • The switch involved extra product costs without good reason. • The fund(s) recommended were not suitable for the customer’s attitude to risk and personal circumstances. • The adviser failed to explain the need for or put in place ongoing reviews when these were necessary. • The switch involved loss of benefits from the ceding scheme without good reason. Additional guidance was issued by the FSA in 2012 and then by the FCA in 2016 much of which focused on the impact of additional charges incurred when switching plans and a lack of evidence to demonstrate why improved performance, where required to offset charges or as an objective, was more likely to be achieved in the new recommended investment. As well as this, in deciding whether the advice was suitable I have considered what obligations Quilter had when providing that advice and in conducting its suitability exercise. In doing this I expect to see that a business has obtained necessary information regarding the consumer’s knowledge and experience in investing, their financial situation and any investment objectives – essentially enough information to understand the most important facts of the consumer so that the recommendation meets the consumer’s investment objectives. These considerations also include their attitude to risk, the purpose of investing and how long they want to invest for; whether the consumer can financially withstand the investment risk; any potential future changes to their circumstances (financial and personal); the extent of their regular income, assets, cash holdings, investments, property liabilities and regular financial commitments. As already mentioned above from the information I have looked at on this complaint it is evident that Mrs N had a justifiable need for wanting access to her pension – to release a specific amount of cash in order for her to put down a deposit on a new property. It seems that Mrs N wasn’t able to draw down from her existing plans because one of the plans was deemed to be a legacy one as it had been set up in 2009 and so in 2016 when Mrs N needed the money the provider was struggling to implement a flexi-drawdown into its legacy systems. And also because just drawing on the other one wouldn’t have given the amount of cash that she required for the property. So it appears that Mrs N had to consolidate the pensions into one and the take then tax-free cash amount of the combined values. Furthermore, I know one of the plans had a penalty attached to it upon transfer. However the suitability report records that Mrs N had confirmed she wanted this plan included in the

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drawdown recommendation because the penalty was comparatively small in the context of the total value of her funds and again as noted above it enabled her to take the full amount of cash that she specifically needed. So I am satisfied with the basis of the rationale of the recommended advice. I am also satisfied with the information the adviser provided to Mrs N about the proposed advice along with its risks, all stated clearly in the suitability report. It was noted that the adviser had investigated the details of each of her existing plans and confirmed that there were no benefits in either of them that would be lost upon their transfer. It was also detailed in the report that the adviser had considered alternative options as to how Mrs N could have met her objective, but they were discounted. This was because in relation to an annuity she didn’t want or need to start drawing an income and her priority was to leave her pension funds intact as far as possible for the benefit of her beneficiaries. Also, in terms of obtaining a loan or a mortgage this wasn’t a viable option for her because she was unemployed and therefore had no income; and she apparently had no other savings or investments. And I am satisfied that all potential risks of accepting the advice were set out clearly for Mrs N, such as the effect the drawdown would have on her retirement income in the future and the potential for a high-income tax bill in the future. Details of the product costs and charges were also provided to Mrs N in the illustrations and appendices attached to the suitability report that was provided to her. This included details of the effect of the plan’s charges on her investments, along with the charges for Quilter’s service and the regular review service. And while these charges would have been more expensive than her existing provider at the time, as I have already explained, it seems to me that Mrs N had to transfer away from her providers because she needed a specific amount of money to be released and this could only happen if the two plans were consolidated. So while she would have been subject to more expensive charges, I think the recommendation was suitable in this regard. In terms of Mrs N’s attitude to risk, which was categorised as Balanced, on the face of it, given she wasn’t earning anything and had no income or savings or other investments this could seem too risky for her. However, Mrs N had other pension provisions as well as a deferred benefit pension with a scheme retirement age of 65 and was expecting to receive a full state pension. She had also stated that she had planned to work until she reached age 66 subject to obtaining new employment – which wasn’t unlikely given she was a qualified professional and still had around an eight-year investment time horizon. I have also considered carefully Mrs N’s responses to the attitude to risk questionnaire which ultimately determined her balanced attitude to risk. I can see there was some discrepancy between Mrs N saying she wouldn’t be described as a cautious person but then answered other questions which indicated that she could be. However, I can also see that the adviser didn’t just rely on the questionnaire as was documented in the suitability report and discussed the situation with Mrs N and she seemingly agreed and accepted that some risk was needed in order to achieve some growth over the time horizon until her retirement. So on that basis I am satisfied that the attitude to risk of Balanced wasn’t unsuitable for her. Mrs N’s representative has said that the transfer invested Mrs N’s monies exclusively into Quilter’s managed pension funds thereby removing any spread of management risk and diversity from her funds. But the recommendation was to invest in the Cirilium Balanced Portfolio which was aligned to a medium risked investment strategy and was diversified across asset classes and different fund managers. So in light of this I am satisfied this fund and the recommendation was suitable for her as a Balanced risked investor.

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Her representative has also said that Mrs N didn’t understand the implications of the recommendation and that she could lose all her accrued and future guaranteed pension benefits. However, as I have already mentioned, the suitability report clearly sets out the potential disadvantages of making the switch and the adviser had confirmed there were no guaranteed pension benefits that would be affected. Overall, therefore I am satisfied that the recommendation and the advice Mrs N accepted was largely suitable for her and allowed her to meet her stated aims and objectives at the time. Ongoing advice charges and annual reviews As detailed earlier Quilter agreed to refund the charges Mrs N had paid for the reviews that were missed from 2018 until the time she disengaged Quilter’s services. But as I have also explained above, the review that should have taken place in 2017 must also be considered as a part of this complaint because of my finding that it falls within the required timescales. So based on the information I have, as well as Quilter’s own findings, there appears to have been no ongoing advice reviews since the advice was provided in October 2016. Therefore, because Mrs N didn’t receive the service she was paying for in 2017 (as well as 2018 until 2020) it seems all the ongoing adviser charges that she has paid Quilter from inception of the policy until the point she transferred away from Quilter must be refunded. And while Quilter may argue that Mrs N was clearly told that she should contact the adviser in order for a review to take place, the FCA set out guidance as to what was required from advisers and firms with regards to ongoing adviser charges and this included an expectation that firms should “…ensure you have robust systems and controls in place to make sure your clients receive the ongoing service you have committed to”. So given this, in placing the onus on Mrs N to contact Quilter to arrange a review doesn’t in my view tie in with the expectation of the FCA and I don’t think this process shows that Quilter had a robust system in place at the time to ensure the annual reviews were carried out as they should have been. Overall, therefore, as explained above I think the complaints about the suitability of the advice and the annual reviews that should have taken place have all been brought to this Service within the required timescales. In terms of the merits of the suitability of the advice complaint I am satisfied it was largely suitable for Mrs N based on the information provided to me. And in terms of the ongoing adviser charges and the provision of the annual reviews I am of the view that this point should be upheld because there is no evidence that Quilter carried out any of the annual reviews that Mrs N was paying for. Therefore, these charges must be refunded to Mrs N in full, from the date of inception until the date she transferred away from Quilter, while bringing any losses up to date. Putting things right Quilter has made an offer which includes a return rate based on the investment growth from the FTSE UK Private Investor Income Index (Total Return), for the years 2018 to 2020. For the reasons given above, it is fair and reasonable for Quilter to refund all OACs deducted since inception up to the point Mrs N disengaged with Quilter (the charges paid for the reviews that should have taken place in 2017, 2018, 2019 and 2020), including a return rate based on the same benchmark index - FTSE UK Private Investor Income Index (Total Return). This is aligned to Mrs N’s attitude to risk.

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Whilst adjusting the refunded charges with assumed growth from the index may not precisely reflect the position Mrs N would be in, had the fees not been taken, it is likely to be a reasonable approximation. It provides a pragmatic fair and reasonable resolution to the complaint. For the existing offer and additional proposed fee refunds, Quilter should repay those adviser’s fees together with the assumed growth, from the date the fees were paid to the date of settlement. Please also provide the details of the calculation to Mrs N in a clear, simple format. Income tax may be payable on any interest paid. If Quilter considers it is required by HM Revenue & Customs to deduct income tax from that interest, it should tell Mrs N how much has been taken off. Quilter should also give Mrs N a tax deduction certificate in respect of interest if Mrs N asks for one, so she can reclaim the tax on interest from HM Revenue & Customs if appropriate. My final decision My final decision is that I uphold this complaint. I direct Quilter Financial Services Limited to pay Mrs N the redress using the methodology above. Under the rules of the Financial Ombudsman Service, I’m required to ask Mrs N to accept or reject my decision before 19 February 2026. Ayshea Khan Ombudsman

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