Tideway Investment Partners LLP · DRN-5973315

The complaint Mr B complains that the advice Tideway Investment Partners LLP (Tideway) gave him in 2016 and 2017, to transfer three defined benefit (DB) scheme pensions to a self-invested personal pension (SIPP), was unsuitable. What happened Mr B had three DB scheme pensions, amongst other assets. In 2016, he approached Tideway for advice about his pensions. Engagement documents were completed and Mr B was asked to complete a fact-find document. He was also provided a copy of Tideway’s ‘Guide to Final Salary Transfers’ and confirmed to Tideway that he’d read the guide. Mr B completed the fact-find document, setting out his circumstances at the time as: • 52 years old and married • semi-retired project manager, earning £46,000 per annum • intended to retire at age 55 • estimated that he needed £25,000 per annum (net) to meet his expenditure in retirement • had a residential property worth £350,000 with a mortgage of £30,000 and an investment property with no mortgage that generated income of £9,000 p.a. into Mrs B’s name, which covered their fixed costs (bills) • had finance for his car • had individual savings of £21,000 (Mrs B was recorded as having £26,500 in individual savings) • the total value of his retirement provision was around £935,000 • Mr B documented his risk profile as medium, defined as “To have a balance of risks including cash, fixed interest investments and some exposure to higher risk investments and volatility in overall fund values”. During October and November 2016 Tideway was provided with information about Mr B’s retirement provision as follows: • ‘Pension 1’ – a DB scheme which was valued at approximately £650,000. • ‘Pension 2’ – a hybrid DB/defined contribution (DC) scheme valued at around £175,000. • ‘Pension 3’ – a DB scheme with an approximate value of £35,000. • ‘Pension 4’ – a DC scheme valued at approximately £30,000. • ‘Pension 5’ – a protected rights only (DC scheme) with a value of approximately £70,000. • ‘Pension 6’ – a DC scheme with a value of approximately £40,000. Mr B was contributing 5% and his current employer also contributed 5%. Mr B’s objectives for Pension 1 were recorded as: • to take tax-free cash before normal retirement date

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• flexible pension income • tax planning on income On 29 October 2016, Tideway issued its ‘Final Salary Transfer Advice Initial Appraisal’ document for Pension 1. The purpose of this free report was to provide an initial judgment as to the likely suitability of taking the transfer option. The report noted: • The Cash Equivalent Transfer Value (CETV) was £653,911 and expired on 13 January 2017. • The CETV without any return would last to age 81 before running out. An investment return of 3.08% p.a. after fees would match the final salary income until Mr B was 100 years old. This would represent a 0.58% real return, net of assumed inflation of 2.5% The report also noted reasons Mr B might consider transferring his benefits at that time: • Mr B had sufficient pension and savings such that he didn’t need the twin guarantees of the final salary pension i.e. income for life and fixed payments. • Mr B wanted to take advantage of the new pension rules, which allowed him to pass on unused pension savings. • Mr B wanted the freedom to access his pension as and how he wanted, instead of being restricted to a fixed income from the final salary scheme. For example, he could access the tax-free cash sum early without drawing a pension and could vary the pension withdrawals to enable him to avoid higher rates of tax on his pension income. • Mr B understood the transfer values were currently high, due to very low Gilt yields. • Mr B had concerns over the ability of the Pension 1 scheme and his previous employer to meet the full liabilities of the scheme going forward. On 20 December 2016, Tideway issued its ‘Final Salary Transfer’ report for Pension 1. This confirmed, amongst other things: • Mr B’s new arrangement would need to achieve 3.11% per annum for him to receive the same pension income as Pension 1 to age 100 and the critical yield needed to match the scheme benefits at age 60 was 3.50% p.a. net of fees. • Mr B was eligible to take benefits from Pension 1 early – from age 50 – subject to a reduction for income for early retirement. This benefit would be lost on transfer. The report also confirmed the transfer to a SIPP would meet Mr B’s objectives and advised him to transfer Pension 1 to the SIPP. Tideway made no recommendation for how the funds should be invested after the transfer, stating that Mr B intended to manage the investments himself. The report noted elsewhere that Mr B’s attitude to risk regarding his retirement was low, though he accepts that there will be a need to have some volatility in the value of his funds to generate higher long-term returns. I understand the SIPP provider and product was recommended, in part, so that Tideway’s fees could be paid from the funds transferred – Tideway said this would reduce the amount of Mr B’s fund for Lifetime Allowance (LTA) purposes and was the most tax efficient way to do things. Tideway understood that Mr B would then switch to a different SIPP arrangement to self-manage his investments; it was noted that Mr B would incur some fees were he to change his SIPP. For this advice, Tideway charged 1% of the value transferred.

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Mr B accepted Tideway’s advice, and on 13 February 2017, Tideway confirmed to Mr B that his new SIPP had received the transfer from Pension 1. The transferred funds were held in cash. Mr B transferred to a different SIPP provider (Provider B) on 22 March 2017. While Tideway was providing advice on Pension 1, Mr B was also considering transferring his other DB pensions. And he sought additional advice regarding Pension 2 and Pension 3. On 24 March 2017, Tideway issued its ‘Final Salary Transfer Report’ for Pension 2 and Pension 3. It said, amongst other things: • Regarding Pension 2: the critical yield needed to buy an annuity at age 65 was 6% p.a. net of fees. And the funds would need to grow at 4.45% p.a. for him to receive the same pension income as Pension 2 to age 100. • Pension 2 would provide Mr B with a protected tax-free cash lump sum, which would be lost on transfer. • Regarding Pension 3, the critical yield needed to buy an annuity at age 65, was 2% p.a. net of fees. And the fund would need to grow at 3.02% p.a. for him to receive the same pension income as Pension 3 to age 100. The report also confirmed the transfer to a SIPP would meet Mr B’s objectives and advised him to transfer Pension 2 and Pension 3 to the SIPP. Once again, no recommendations were made for how the funds were to be invested, noting that Mr B intended to manage the investments himself. But the report noted elsewhere that Mr B’s attitude to risk regarding his retirement was low, though he accepts that there will be a need to have some volatility in the value of his funds to generate higher long-term returns. For this advice, Tideway would receive 1% of the value transferred. Mr B accepted Tideway’s recommendation to transfer Pension 2 and Pension 3 to his original SIPP – again to facilitate payment of the adviser charges from within the pension. On 26 June 2017, Tideway confirmed to Mr B that the transfer to the SIPP had been completed and his funds were invested as cash. A couple of weeks later, Mr B transferred the funds in his original SIPP to his new arrangement with Provider B and the original SIPP was closed. On 24 June 2021, Tideway wrote to Mr B to let him know it was undertaking a Skilled Person Review of the advice he received to transfer his three DB pensions to a SIPP. It asked if he wanted to be included in the review, and if so, set out what information it needed from him. Mr B responded on 30 June 2021 to say he wanted to be included in the review, and he provided the information requested. He added The quote in Tideway’s Final Salary Transfer Report dated 24th March 2017, on page 7: ‘It’s not unrealistic to target 4-5% p.a. net of fees with a relatively low risk portfolio.’ Has proven to be somewhat over optimistic. With the ongoing and protracted low interest rates, and the uncertain times we now live in, I do regret having transferred these Pension Schemes and wish I had

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remained with the certainty and reassurance of regular and annually increasing DB scheme payments. On 15 July 2021, Tideway wrote to Mr B asking for some further information and also said, Finally, I would also like to respond to the final paragraph in your response in which you documented your regret at transferring and wished that you had remained with the reassurance of regular and annually increasing DB scheme payments. When read in context with your response, l am unsure if you are making a formal complaint regarding the advice you received and, as such, at this stage, l have not taken your comments as a formal complaint. However, after reading this response should you wish to make a formal complaint, you are able to do so and please do let me know. The complaint would then be subject to our regulatory complaints investigation process in which we would investigate and assess the advice provided to you in 2017. On 26 July 2021, Mr B wrote to Tideway with information it had requested, including that he’d retired in July 2017 to look after his wife who’d had health difficulties at that time. In this letter, Mr B also said his wife had recently been diagnosed with a serious life-limiting illness with no treatment options and had just started palliative chemotherapy, and that ln light of this new situation, l will await the conclusion of your review before deciding whether to progress to a formal complaint, as my previous responses in reference to Tideway’s quoted over optimistic investment performance still stand. Sadly, Mr B’s wife passed away in February 2022. And he himself was diagnosed with a serious health condition in November 2022. As part of the Skilled Person Review, a third party, which I’ll call the ‘Reviewer’, reviewed the DB transfer advice Tideway had given Mr B. On 20 December 2023, the Reviewer wrote to Mr B to say it had reviewed the 2016 advice to transfer Pension 1 and concluded this advice was unsuitable. There followed email communication in which the Reviewer told Mr B it would carry out a loss calculation in relation to Pension 1 and Mr B gave it his authority to contact his SIPP provider. Mr B also highlighted that Pensions 2 and 3 had been transferred too, which the Reviewer acknowledged. Tideway wrote to Mr B on 7 March 2024 about the loss calculation. It gave an explanation of the inputs and methodology underpinning the calculation, and said that the calculation had shown that the unsuitable transfer advice in respect of Pension 1 hadn’t caused him a financial loss. Mr B complained to Tideway on 2 April 2024, as he was unhappy with how the review had been carried out and said the assumptions and basis appeared to be wrong. He said the review had only included Pension 1, not Pensions 2 or 3, that it had incorrectly factored in tax-free cash, and that he was unsure if fees he’d paid should be deducted in the calculations. He wanted Tideway to put things right by confirming that all three DB pensions had been included in the review and that the correct inputs had been used, by re-running the loss calculations as at 1 April 2024, and by providing him with full details of the new calculations so he could verify they were correct and complete. The Reviewer concluded the advice to transfer Pension 2 and Pension 3 was suitable. It is unclear when this information was provided to Mr B.

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Tideway issued its final response to this complaint on 11 April 2024. It didn’t uphold it. It said the Reviewer was an expert and had the regulator’s approval, and Tideway was satisfied the Reviewer had discharged its duty competently in line with the regulator’s rules. On 17 September 2024, Mr B brought his complaint to this Service. In summary, he said Tideway’s transfer advice regarding his three DB pensions had been unsuitable and the Reviewer had now confirmed this. He said that after his retirement it became apparent Tideway’s transfer advice had been too optimistic and had assumed unrealistic returns and hadn’t set out the guaranteed benefits he’d be giving up or the risks of transferring. Mr B also said the review and its loss calculations had been carried out incorrectly and taken too long, causing him a financial loss. Our Service had further communication with Mr B in October 2024, in which he confirmed he wanted to complain about the suitability of Tideway’s 2016 and 2017 DB transfer advice. So we split his complaint into two separate complaints: one about the suitability of its advice to transfer the benefits from his DB schemes, and one about how the review of that advice had been carried out. And as Tideway had not addressed a complaint about the suitability of its 2016 and 2017 DB transfer advice, our Service told Tideway on 18 November 2024 that it should investigate this complaint for Mr B. On 13 January 2025, Tideway issued its final response to Mr B’s complaint about the suitability of its 2017 advice to transfer Pensions 2 and 3. It said Mr B had complained about this too late under the relevant time limit rules. Because this complaint had been made on 18 November 2024 when our Service asked it to address this. And this was more than six years after the events complained of, and more than three years after Tideway’s letter of 24 June 2021, which ought reasonably to have made Mr B aware he had cause for complaint because this letter said the advice to transfer his three DB pensions would be reviewed but that he also still had the right to make a complaint and pointed out the time limits for doing so. Tideway said it had asked Mr B at that time whether he wanted to make a complaint, but he’d said he would wait until the review was concluded before deciding whether to make a formal complaint. His choice to wait before complaining didn’t amount to exceptional circumstances. Mr B disagreed. He accepted he’d chosen not to pursue his complaint until the review was complete, but said he’d wanted to give Tideway the opportunity to sort things out as our Service’s website said consumers should. Also, he couldn’t have known the review would take so long to conclude and he wasn’t in possession of any information to allow him to make a complaint until he received the loss calculation outcome letter in March 2024. And he’d complained to Tideway on 2 April 2024, so within three years of this letter. Further, his complaint to our Service in September 2024 included the Pension 2 and 3 transfers. In communication with our Investigator, Tideway agreed for the suitability of its December 2016 advice to transfer Pension 1 to be included within this complaint. Which for clarity, is solely about the transfer advice. Mr B’s complaint about how the review of that advice had been carried out has been dealt with separately. In its submission to us, Tideway maintained its position that the complaint about the 2016 and 2017 advice had been raised too late. And the question of jurisdiction was ultimately referred for an Ombudsman’s decision.

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Another ombudsman at this Service considered whether we could review Mr B’s complaint. She issued a provisional decision explaining that the complaint had been made in time and would be referred back to the investigator to consider the merits of the complaint. Tideway didn’t provide any further comments on the issue of jurisdiction. And in any case, the ombudsman told Tideway she thought it appeared to have accepted the provisional decision on jurisdiction – even though it didn’t necessarily agree with it – since it then told us it was potentially open to exploring a settlement with Mr B. No settlement was reached and our investigator then upheld the complaint. She thought the transfers hadn’t been in Mr B’s best interest and there was no persuasive evidence why it had been suitable advice for Mr B to give up his guaranteed benefits. She reasoned, in relevant part: • The Pensions 1, 2 and 3 amounted to approximately 85% of Mr B’s overall private retirement provision and more than 60% of the value of the three pensions provided a guaranteed income at retirement. • There was little point in Mr B giving up the guarantees available to him through his DB schemes, just three years before his intended retirement age, to achieve the same level of benefits outside the schemes. In her view, there was insufficient evidence to demonstrate there was any realistic chance of Mr B improving on the benefits being given up. • There were no compelling reasons to give up the guarantees of the DB schemes. Whilst Mr B expressed an interest in accessing his pension savings flexibly, there was no evidence that this want was an actual need or that Tideway sought to understand why Mr B wanted to access his pensions flexibly. • The different death benefits available through a transfer to a SIPP did not justify the likely decrease of Mr B’s retirement benefits and life insurance was not properly explored as an alternative to provide for his family on his death. • There was insufficient evidence that Mr B was or should have been genuinely concerned about the security of these DB pension schemes. • At the time of the advice, the regulator had made clear that it considered in order to suitably advise on pension transfers, a firm needed to consider the suitability of the underlying investments to be held in the new arrangement. But Tideway did not provide Mr B with any recommendation about the investments held within the SIPP after the DB scheme benefits were transferred. The investigator concluded that had suitable advice been provided, Mr B would have most likely remained in his DB schemes and she directed Tideway to 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: https://www.handbook.fca.org.uk/handbook/DISP/App/4/?view=chapter. Mr B broadly agreed with the investigator’s findings but thought that Tideway should be directed to run the redress calculations “using a backdated Valuation/Redress Calculation date as at [his] actual retirement date of 10th December 2021, taking into account market conditions and assumptions at that date”. The investigator responded that the aim of any redress our Service recommends is to place the consumer in the position they would be in now, but for the business’s errors, so she didn’t agree the redress calculations should be backdated. Tideway also didn’t agree with the investigator’s view and in subsequent correspondence the investigator explained:

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• Although in the calls during the advice process with Tideway Mr B displayed a good understanding, ultimately, he was in the hands of a professional adviser, whose expertise he had sought out and was paying for, to provide suitable advice which wasn’t provided. • Our Service provides an independent assessment of complaints brought to us and how we consider complaints may be different to third parties. We cannot comment on the Skilled Person Review investigation and outcome. • Because of the close proximity of the advice, and that the complaint was made about the advice regarding all three schemes at the same time, the investigator considered the suitability of the transfers together. But ultimately the adviser was advising on the suitability to transfer each DB scheme individually. If suitable advice had been provided, Mr B would have had three individual DB schemes providing income, so the investigator concluded the loss assessment should be completed for each DB scheme and each loss assessment outcome should only apply to the DB scheme subject to that loss assessment. She was not persuaded that any gain found by one DB scheme loss assessment should be used to offset any loss found by a different DB scheme loss assessment. Tideway responded and said, in summary: • Not all the evidence – specifically the telephone calls and transcripts Tideway submitted of conversations with Mr B during the advice process showing he appeared quite knowledgeable – was properly considered. And Mr B’s recent testimony has been accepted as accurate and truthful with no challenge. • The Skilled Person Review found that the transfers of Pensions 2 and 3 were suitable, but the investigator reached a different outcome. It was unfair and irrational to not consider the findings of the FCA approved Skilled Person acting under Section 166 in the investigation. • For Pension 1, a loss calculation has already been completed by the Skilled Person in accordance with the FCA rules on Defined Benefit redress methodology – there has been no dispute as to the accuracy of the loss calculation so it should stand. • The investigator considered the advice provided on all three schemes together rather than on their individual merits. So financial viability was not considered individually and where the investigator considered financial viability, it was based on metrics used out of context and therefore flawed. • The advice was not provided on the basis Mr B would purchase an annuity so the more appropriate comparison would be using the returns required to receive the same pension to age 100 (or to age 90 – both being higher than average life expectancy). • Mr B has significant excess funds in Pension 1 (per the Reviewer’s loss calculation), so if losses are identified in Pension 2 or Pension 3, and a cash settlement is offered, Mr B could actually be placed in a financially better position than had he remained in the schemes. It thought that completing three sequential loss calculations should offset losses and gains to produce one overall figure that is needed to place Mr B in the position he would be in had he remained in the schemes. The investigator wasn’t persuaded to change her opinion, so the complaint was referred to me to make a final decision. Mr B subsequently provided further comments in support of his position that the calculations should be backdated. He also said that he accepted that the loss calculations for Pension 1 and Pension 3 should take into account tax-free cash, but he asserted that Pension 2 should be exempt under DISP App 4.5 Technical guidance – FCA Handbook as this scheme was a

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hybrid scheme, with a sufficient amount in the DC element to have fully funded the tax-free cash entitlement, and the guaranteed DB element wouldn’t have been needed. Most recently, Tideway provided an updated response to the initial assessment largely reiterating the points it previously made, including that an updated loss calculation for Pension 1 is unfair and unnecessary. Tideway further said after receiving the results of its loss calculation for Pension 1, Mr B “should have purchased an annuity to provide (and exceed) the secure benefits he would have received by staying in the scheme.” And asserts that the investigator’s view places no responsibility whatsoever on Mr B acting on the Pension 1 loss calculation. 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. Jurisdiction As an initial matter, I have reconsidered whether this complaint was brought within the regulator’s time limits. And having done so, I agree with my ombudsman colleague’s provisional decision that this is a complaint this Service can consider. Tideway did not provide any further comments in response to the provisional decision, and so I don’t intend to repeat the arguments already made. But in summary, like my colleague, I consider Mr B’s letter of 30 June 2021 to be an expression of dissatisfaction with the advice Tideway had given him to transfer his three DB pensions in 2016 and 2017 and therefore met the definition of a complaint under the regulator’s rules. As this was raised within six years of the advice, the complaint was made in time. Accordingly, under DISP Tideway should have treated it as a complaint at the time and addressed it in a final response letter (or summary resolution) which met the expectations for such as set out in DISP, including Mr B’s right to refer his complaint to this Service and the six-month time limit for him to do so. But Tideway didn’t treat it as a complaint or issue a final response or summary resolution. Therefore, the six-month time limit did not start to run in this case, and so it follows that it cannot have expired. So, I consider Mr B first complained to Tideway about the suitability of its 2016 and 2017 DB transfer advice on 30 June 2021, within the six-year time limits. And that this complaint was not brought outside the six-month time limits. Therefore, it is a complaint within our jurisdiction to consider. I will now address the merits of Mr B’s complaint. Was the advice suitable? I’d first like to clarify that the purpose of this final decision isn’t to repeat or address every single point raised by Mr B and Tideway. If I haven’t commented on any specific point, it’s because I don’t believe it’s affected what I think is the right outcome. When considering what’s fair and reasonable, and in accordance with the Financial Services and Markets Act 2000 (FSMA) and DISP, I’ve taken into account relevant law and regulations, regulator’s rules, guidance and standards and codes of practice, and, where appropriate, what I consider to have been good industry practice at the time. This includes

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the Financial Conduct Authority’s (FCA) the Principles for Businesses (PRIN) and the Conduct of Business Sourcebook (COBS). Where the evidence is incomplete, inconclusive or contradictory (as some of it is here) I reach my conclusions on the balance of probabilities – that is, what I think is more likely than not to have happened based on the available evidence and the wider surrounding circumstances. The applicable rules, regulations and requirements This isn’t a comprehensive list of the guidance, rules and regulations which applied in 2016 and 2017, but provides useful context for my assessment of Tideway's actions here. PRIN 6: A firm must pay due regard to the interests of its customers and treat them fairly. PRIN 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. COBS 2.1.1R: A firm must act honestly, fairly and professionally in accordance with the best interests of its client (the client's best interests rule). The provisions in COBS 9 which deal with the obligations when giving a personal recommendation and assessing suitability. And the provisions in COBS 19 which specifically relate to a DB pension transfer. Having considered all of this and the evidence in this case, I’ve decided to uphold the complaint for largely the same reasons given by the investigator. I understand that a Skilled Person Review was conducted on each of the three transfers. The outcome of the review was that the advice to transfer Pension 1 was unsuitable, but Mr B hadn’t suffered a loss. The advice to transfer Pensions 2 and 3 was deemed suitable by the Reviewer. Tideway has said that it is unfair and irrational to not consider the findings of the FCA approved Skilled Person acting under Section 166 in the investigation. I wish to briefly address Tideway’s point about the effect of its review of the advice given to Mr B, and the redress calculations, being conducted by the Skilled Person. I can assure Tideway that I have considered the Reviewer’s assessments and all the documents that were provided with them. However, my role is to consider a complaint and related evidence independently and I am not bound by what the Reviewer has done. As previously set out in this decision, I’ve taken into account COBS 9 and COBS 19 as well as the Principles, FCA rules and guidance and good industry practice and the circumstances at the time. Notably, the case summary for the Pensions 2 and 3 Skilled Person Review states that the finding of suitability was based in part on the assumption that Pension 1 was not transferred. This differs to my analysis, which considers the actual circumstances at the time of the advice. And having done so I’ve reached a different outcome than the Reviewer regarding Pensions 2 and 3 for the reasons I will explain below. The advice to transfer Pension 1 was provided in late 2016, while the advice to transfer Pensions 2 and 3 was given jointly in early 2017. While I’ve considered the advice to transfer each pension independently, I cannot ignore that the advice was provided only a couple months apart, Mr B’s objectives and circumstances remained broadly the same, and the adviser was aware while advising on Pension 1 that Mr B was exploring transferring from Pension 2 and Pension 3.

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The FCA’s suitability rules and guidance that applied at the time Tideway advised Mr B were set out in COBS 9. The purpose of the rules and guidance is to ensure that regulated businesses, like Tideway, take reasonable steps to provide advice that is suitable for their clients’ needs and to ensure they’re not inappropriately exposed to a level of risk beyond their investment objective and risk profile. To ensure this was the case, and in line with the requirements COBS 9.2.2R, Tideway needed to gather the necessary information for it to be confident that its advice met Mr B’s objectives and that it was suitable. Broadly speaking, this section sets out the requirement for a regulated advisory business to undertake a “fact find” process. There were also specific requirements and guidance relating to transfers from defined benefit schemes – these were contained in COBS 19.1. COBS 19.1.2R required the following: A firm must: (1) compare the benefits likely (on reasonable assumptions) to be paid under a defined benefits pension scheme or other pension scheme with safeguarded benefits with the benefits afforded by a personal pension scheme, stakeholder pension scheme or other pension scheme with flexible benefits, before it advises a retail client to transfer out of a defined benefits scheme or other pension scheme with safeguarded benefits; (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, in good time, and in any case 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. Under the heading “Suitability”, COBS 19.1.6 set out the following: When advising a retail client who is, or is eligible to be, a member of a defined benefits occupational pension scheme or other scheme with safeguarded benefits whether to transfer, convert or opt-out, a firm should start by assuming that a transfer, conversion or opt-out will not be suitable. A firm should only then consider a transfer, conversion or opt-out to be suitable if it can clearly demonstrate, on contemporary evidence, that the transfer, conversion or opt-out is in the client's best interests. COBS 19.1.7 also said: When a firm advises a retail client on a pension transfer, pension conversion or pension opt-out, it should consider the client’s attitude to risk including, where relevant, in relation to the rate of investment growth that would have to be achieved to replicate the benefits being given up. And COBS 19.1.8 set out that: When a firm prepares a suitability report it should include: (1) a summary of the advantages and disadvantages of its personal recommendation; (2) an analysis of the financial implications (if the recommendation is to opt-out);

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and (3) a summary of any other material information. Tideway’s advice was given in late 2016 and early 2017, which was several years after the regulator had made their position clear that when assessing the suitability of a pension transfer, a firm needed to consider the suitability of the underlying investments intended to be held in it. This was evident in 2013 when the then regulator, The Financial Services Authority (FSA) issued an alert regarding advice to invest in SIPPs and other pension wrappers. The relevant parts said: It has been brought to the FSA’s attention that some financial advisers are giving advice to customers on pension transfers or pension switches without assessing the advantages and disadvantages of investments proposed to be held within the new pension. In particular, we have seen financial advisers moving customers’ retirement savings to self-invested personal pensions (SIPPs) that invest wholly or primarily in high risk, often highly illiquid unregulated investments (some of which may be in Unregulated Collective Investment Schemes)… The FSA’s view is that the provision of suitable advice generally requires consideration of the other investments held by the customer or, when advice is given on a product which is a vehicle for investment in other products (such as SIPPs and other wrappers), consideration of the suitability of the overall proposition, that is, the wrapper and the expected underlying investments in unregulated schemes. It should be particularly clear to financial advisers that, where a customer seeks advice on a pension transfer in implementing a wider investment strategy, the advice on the pension transfer must take account of the overall investment strategy the customer is contemplating. I appreciate that the example given in the regulator’s alert didn’t exactly follow Mr B’s circumstances. But I can see the regulator’s alert makes it clear that suitable advice generally requires a business to consider the underlying intended investments. And the alert pointed firms toward COBS and PRIN which asks firms when giving advice to first take time to familiarise themselves with the wider investment and financial circumstances of their customer. In my view the regulator was alerting businesses to standards which have a broad application to pension switching and transfer advice. So, I think the alert is relevant to Tideway in this case. This is further demonstrated when in 2014 the FCA issued a further alert containing similar warnings which said: Where a financial adviser recommends a SIPP knowing that the customer will transfer or switch from a current pension arrangement to release funds to invest through a SIPP, then the suitability of the underlying investment must form part of the advice given to the customer. If the underlying investment is not suitable (…), then the overall advice is not suitable. If a firm does not fully understand the underlying investment proposition intended to be held within a SIPP, then it should not offer advice on the pension transfer (…) at all as it will not be able to assess suitability of the transaction as a whole. Furthermore, in January 2017 the FCA issued a news story entitled ‘Advising on pension transfers – our expectations’. The FCA said: We are aware that some firms have been advising on pension transfers or switches without considering the assets in which their client’s funds will be invested. We are

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concerned that consumers receiving this advice are at risk of transferring into unsuitable investments or – worse – being scammed. Transferring pension benefits is usually irreversible. The merits or otherwise of the transfer may only become apparent years into the future. So it is particularly important that firms advising on pension transfers ensure that their clients understand fully the implications of a proposed transfer before deciding whether or not to proceed. What we expect We expect a firm advising on a pension transfer from a defined benefit (DB) scheme or other scheme with safeguarded benefits to consider the assets in which the client’s funds will be invested as well as the specific receiving scheme. It is the responsibility of the firm advising on the transfer to take into account the characteristics of these assets. Our rules set out what a firm must do in preparing and providing a transfer analysis. In particular, our rules (COBS 19.1.2R(1)) require a comparison between the likely benefits (on reasonable assumptions) to be paid under a DB scheme or other scheme with safeguarded benefits and the benefits afforded by a personal pension scheme, stakeholder scheme or other pension scheme with flexible benefits. The comparison should explain the rates of return that would have to be achieved to replicate the benefits being given up and should be illustrated on rates of return which take into account the likely expected returns of the assets in which the client’s funds will be invested. Unless the advice has taken into account the likely expected returns of the assets, as well as the associated risks and all costs and charges that will be borne by the client, it is unlikely that the advice will meet our expectations (see guidance at COBS 19.1.2 and 19.1.6-19.1.8). The FCA went on to say firms shouldn’t undertake a comparison using generic assumptions for hypothetical receiving schemes. The firm must take into account the likely expected returns of the assets in which the client’s funds will be invested as well as the specific receiving scheme. I’ve therefore considered the suitability of Tideway’s advice to Mr B in the context of the above requirements and guidance and would comment as follows. Financial Viability Mr B said on the fact-find he completed that his attitude to risk (ATR) was medium. But elsewhere it was stated that he was a “fairly cautious” investor. I’ve seen no evidence that Mr B’s ATR was properly assessed by Tideway. However, the suitability reports seem to record Mr B as having a low ATR. And this was the ATR used by the Reviewer. Mr B was also approaching retirement, which typically means lower risk is taken. Given all of this, I consider it more likely than not that Mr B’s ATR at the time was low. For each DB Scheme (Pensions 1, 2 and 3) Tideway carried out a transfer value analysis report (as required by the regulator) showing how much Mr B’s pension fund would need to grow by each year in order to provide the same benefits as his DB schemes (this is often referred to as the ‘critical yield’). These were as follows: • critical yield for Pension 1, to buy an annuity at age 60, Mr would be need an annual return of 3.5% p.a. net of fees. • critical yield for Pension 2, to buy an annuity at age 65, Mr B would need an annual

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return of 6% p.a. net of fees. • critical yield for Pension 3, to buy an annuity at age 65, Mr B would need an annual return of 2% p.a. net of fees. Our investigator referred to 'discount rates' being a good indicator of what level of growth would have been considered reasonably achievable. In this case, for each DB scheme, the growth required was as follows: • Pension 1 – 3.3% for each for each of the six years to scheme retirement age of 60 • Pension 2 and Pension 3 – 3.9% for each of the 11 years to scheme retirement age of 65. This demonstrates that Mr B was unlikely to achieve the growth needed to meet the benefits provided by Pension 1 and Pension 2. Tideway asserts that the critical yield is not an appropriate comparator to use for assessing the suitability of the advice, as the advice it provided was not given on the basis that Mr B would purchase an annuity. Tideway thought the more appropriate comparison would be using the returns required to receive the same pension to age 100 (or to age 90 – both being higher than average life expectancy). These required returns were: • For Pension 1 – returns of 3.11% p.a. net of fees would give Mr B the same pension income as Pension 1 to age 100. • For Pension 2 – returns of 4.45% p.a. net of fees would give Mr B the same pension income as Pension 2 to age 100. • Pension 3 – returns of 3.02% p.a. net of fees would give Mr B the same pension income as Pension 3 to age 100. Tideway also said in both suitability reports “a return of 4%, 1.5% above inflation, after costs is a reasonable return expectation for a cautious pension portfolio.” And based on the target return charts produced, the invested transfer values offered by Pension 1 and Pension 3 could match the final salary incomes on offer beyond age 100 for Mr B. While the invested transfer value offered by Pension 2 would match the income offered by the scheme to age 95 at a 4% growth rate. For comparison, the regulator's upper projection rate at the time was 8%, the middle projection rate 5%, and the lower projection rate 2%. While I’ve taken Tideway’s arguments regarding the usefulness of the critical yield under consideration, I would note Tideway had a responsibility to explain to Mr B in a clear way how a transfer would compare with what he was giving up. COBS 19.1.7 said that when a business advises a retail client on a pension transfer it should consider the client’s attitude to risk in relation to the rate of investment growth that would have to be achieved to replicate the benefits being given up. So I consider the critical yield important in determining whether Mr B’s pension might be worth more or less by transferring. Furthermore, the cash flow analysis provided showing the growth rates needs to receive an income to age 100 does not take into account the provision of a spouse’s pension that is provided by the DB schemes (which is accounted for in the critical yield). And Mr B’s sole beneficiary (and the only one listed on his expression of wishes declaration for his SIPP) was his wife, making this an important omission. So I've taken this all into account, along with Mr B’s attitude to risk and also the term to retirement. There would be little point in Mr B giving up the guarantees available to him

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through his DB schemes only to achieve, at best, the same level of benefits outside the schemes. But here, it appears that the returns needed to simply match the benefits of the scheme were only likely for Pension 3 (if using the critical yield metric). But Pension 3 only made up 4% of the funds being transferred to the SIPP. And considering Mr B had other defined contribution schemes worth over £230,000 at the time, I don’t think he needed to give up the guaranteed benefits of Pension 3 to meet his objectives. Furthermore, Tideway did not provide any advice on how the funds should be invested after they were transferred to the SIPP. And said instead that a growth rate of 4% would allow him to take the same income as each DB scheme to an age past normal life expectancy. However, given Mr B’s low ATR, I’m not persuaded that this growth was actually achievable. Under the section ‘Investment Management & Investment Strategy’ of both suitability reports it simply said: “You intend to manage the investments yourself.” In the initial fact find conversation, Tideway appears to assume Mr B’s work experience conveyed a sophisticated knowledge of pensions and investments. And while true Mr B had extensive professional experience working in financial services; he was not a provider of those services. Mr B worked in highly technical IT roles, first as a programmer, then moved into system analysis and spent the latter part of his career as an IT Project Manager. He may have worked on IT projects involving suitability reports, but said he was “purely technical based, with no business knowledge and focused solely on delivering and deploying systems and functionality to enable the business.” I can’t see Tideway enquired into his experience managing his defined contribution funds or other investments. And since Tideway’s recommendation isn’t based on a specific investment, only generic returns, I’m not persuaded there is enough evidence to conclude that these transfers were sufficiently financially viable. Tideway provided this Service with information from the Skilled Person Review. Included was an initial phase case summary. It said: • In addition it is noted that the client was a self-investor and no details were obtained of the fund the client was going to invest in. This being the case it is not known whether Tideway’s Target Return may be achievable for this client. … • We consider that due to the reasons explained above, the case does not clearly demonstrate, on contemporaneous evidence that the transfer was in the client’s best interest. • …It was concluded that there was not sufficient evidence to break the causal link, and therefore this case proceeded to a loss assessment. It is unclear which DB scheme transfer this note refers to, but considering that Tideway did not obtain the details of any of the funds Mr B intended to invest in during its advice to transfer Pension 1, Pension 2 or Pension 3, I can’t see any reason the conclusions in this initial phase case summary do not apply to all three transfers. Given this and the clear regulatory requirements I’ve outlined above, it is difficult to understand how the Reviewer later concluded the advice to transfer Pension 2 and Pension 3 was suitable. Tideway’s financial analysis also seemingly disregarded important guarantees offered by two of Mr B’s DB schemes. Pension 1 offered a protected retirement age of 50. As he was 52 at the time, he could have accessed this pension, albeit at a lower rate. But from the evidence provided, I am not persuaded this was properly considered in relation to Mr B’s objectives and circumstances.

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Additionally, Pension 2 provided a protected tax-free cash entitlement at age 65. At the time of advice, this equated to 31% of the fund value being transferred. As with the protected retirement age, I am not persuaded by the evidence provided, that this benefit was properly considered by Tideway when providing its advice to transfer from Pension 2. The three DB schemes amounted to approximately 85% of Mr B’s overall private retirement provisions. Of this, 80% of these benefits if transferred needed to consistently outpace a critical yield that wasn’t likely achievable. So, I consider Mr B was likely to receive benefits of a substantially lower overall value than the DB schemes at retirement, as a result of investing in line with his low attitude to risk. For this reason alone, transferring out of Pension 1, Pension 2 and Pension 3, was not in Mr B’s best interests. Of course, financial viability isn’t the only consideration when giving transfer advice. There might be other considerations which mean a transfer is suitable, despite providing overall lower benefits. Other Objectives The suitability reports for both pieces of advice set out the reasons Mr B was “attracted to” the transfer route as an alternative to the scheme benefits. For Pension 1 these were: • The additional flexibility of the transfer route, such as the opportunity to access tax-free cash earlier, independent of taking an income and to vary income from year to year • Being able to leave the pension fund, on death, to beneficiaries of your choice • Having control of your pension funds and the potential to grow the size of your pensions in real terms • Take advantage of the high transfer values on offer at present, due to low gilt yields; you have been following the market trends and feel that now is the most opportune time And for Pension 2 and Pension 3: • Generosity of the offer given historically low Gilt yields. • The additional flexibility of the transfer route, such as an opportunity to access tax-free cash earlier, independent of taking an income and to vary income from year to year. • You would like to take control of your pension assets. Both suitability reports also said the following: You have outlined that your objectives following a transfer from the scheme are as follows: • Plan to continue to work on a part-time basis until 55, earning c. £46,000 p.a. • Continue to collect your rental income of c. £9,000 p.a. • 55/56 look to take your tax-free cash and a flexible income as required. • Pass your residual fund on to your beneficiaries upon your death. • You have no interest in annuities I’ve considered this below. Flexibility and income needs

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I don’t think Mr B required flexibility in retirement. This is because based on the evidence I’ve seen, I don’t think he had a genuine need to access his tax-free cash earlier than the normal scheme retirement age and leave the remainder of the funds invested until a later date. Further, if this was a genuine need, he could have accessed benefits from Pension 1 from age 50. But I can’t see that this was considered as a means for meeting this objective, such as it was. I also can’t see evidence that Mr B had a strong need for variable income throughout his retirement. Nor was this point explored with Mr B by Tideway in providing its advice. I can see no discussion of the reasons Mr B would need a variable income in retirement. And the guaranteed income provided by his DB schemes would meet his income needs in retirement and would provide a spouse’s pension in the event of his death, something not guaranteed by the transfer to a SIPP. Mr B also had over £230,000 in defined contribution plans which he could access from age 55. I think his objectives, such as they were recorded, to take benefits flexibly and to control his investments, could have been met through these other arrangements and without the need to transfer his valuable DB scheme benefits and subject them to investment risk unnecessarily. Control or concerns over financial stability of the DB scheme I think Mr B’s desire for control over his pension benefits was overstated. I’ve seen no evidence that Mr B’s investment experience was sufficiently explored by Tideway. And while I can see he had an interest in managing his pension funds, I’ve seen insufficient evidence to persuade me that he had the knowledge to be able to manage his pension funds on his own. It also doesn’t appear that Mr B was looking to grow his funds – the evidence suggests he intended to implement an investment strategy in line with his cautious or low attitude to risk. So, I don’t think that control over his pension benefits was a genuine objective for Mr B – it was simply a consequence of transferring away from his DB schemes. I’ve also been provided with no evidence to suggest that any of the three DB schemes were experiencing any financial difficulty or that there were legitimate concerns over their ability to fund benefits in retirement. So, I don’t think this was an appropriate reason for recommending the transfers. Death benefits Death benefits are an emotive subject and of course when asked, most people would like their loved ones to be taken care of when they die. The lump sum death benefits on offer through a personal pension was likely an attractive feature to Mr B. But whilst I appreciate death benefits are important to consumers, and Mr B might have thought it was a good idea to transfer his DB schemes to a SIPP because of this, the priority here was to advise him about what was best for his retirement provisions. A pension is primarily designed to provide income in retirement. And I don’t think Tideway explored to what extent Mr B was prepared to accept a lower retirement income in exchange for higher death benefits. I also think the existing death benefits attached to the DB schemes were underplayed. Mr B was married and so the spouse’s pension provided by the DB schemes would’ve been useful to his spouse if Mr B predeceased her. I don’t think Tideway made the value of this benefit clear enough to Mr B. This was guaranteed and it escalated – it was not dependent on investment performance, whereas the sum remaining on death in a SIPP was. And as the cashflow analysis shows, there may not have been a large sum left/the fund may have been depleted particularly if Mr B lived a long life. In any event, Tideway should not have

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encouraged Mr B to prioritise the potential for higher death benefits through a personal pension over his security in retirement. Furthermore, if Mr B genuinely wanted to leave a legacy for his spouse, which didn’t depend on investment returns or how much of his pension fund remained on his death, I think Tideway should’ve instead explored life insurance. Overall, I don’t think different death benefits available through a transfer to a SIPP justified the likely decrease of retirement benefits for Mr B. And I don’t think that insurance was properly explored as an alternative. Summary I don’t doubt that the flexibility, control and potential for higher death benefits on offer through a SIPP would have been attractive features to Mr B. Which was likely made more so by the explanations of these features provided in Tideway’s ‘Guide to Final Salary Transfers’, and in comparison to the way annuities were discussed therein. Further, the high cash equivalent transfer values on offer undoubtedly made transferring appealing to Mr B. But Tideway wasn’t there to just transact what Mr B might have thought he wanted. The adviser’s role and applicable regulations required Tideway to truly understand what Mr B needed and recommend what was in his best interests. Ultimately, I don’t think the advice given to Mr B was suitable. He was giving up a guaranteed, risk-free and increasing income which accounted for 85% of his private pension provision. Furthermore, Tideway did not provide any advice regarding the underlying investments for the funds transferred. This is contrary to the regulatory requirements needed to give suitable advice. Overall, by transferring, Mr B was very likely to obtain lower retirement benefits. And I am not persuaded the reasons and objectives provided for the transfer otherwise justified this. So, I think Tideway should’ve advised Mr B to remain in his DB schemes. Would Mr B have transferred anyway? Of course, I have to consider whether Mr B would've gone ahead and transferred anyway, if Tideway had advised against the transfers. Tideway argues that Mr B would have gone elsewhere for positive advice to transfer, essentially asserting Mr B would have insisted on the transfers. While I agree with Tideway that the call records do demonstrate that Mr B seemingly did want to transfer from his DB schemes, I note that these calls took place after Tideway provided Mr B with a copy of ‘Tideway’s Guide to Final Salary Pension Transfers’. This guide included phrases like “annuities are expensive and inflexible insurance policies” and “transfer values are so high at present that a good deal of the investment risk associated with transfers can be removed.” So, it is unsurprising that Mr B was interested in transferring his DB scheme benefits. But Tideway wasn’t meant to merely facilitate Mr B’s wishes. It was required to make sure that what he wanted to do was in his best interests. It is clear from the evidence provided, an in the first fact finding call, that Tideway assumed its advice would be to transfer. And in later calls, before the suitability report had been finalised for Pension 1, Tideway gave Mr B information about what he’d need to do to start the transfer process, even though the advice had not yet been given.

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Having carefully considered all of the circumstances surrounding each transfer, I’m not persuaded that Mr B would’ve insisted on transferring out of the DB schemes, against Tideway’s advice. I say this because there’s insufficient evidence that Mr B was an experienced investor and he had a low attitude to risk. The three DB schemes accounted for the majority of Mr B’s retirement provision. So, if Tideway had provided him with clear advice against transferring out of the DB schemes, explaining why it wasn’t in his best interests, I think he would’ve accepted that advice. I’m not persuaded that Mr B’s concerns about flexibility, death benefits and the viability of his DB schemes were so great that he would’ve insisted on the transfer knowing that a professional adviser, whose expertise he had sought out and was paying for, didn’t think it was suitable for him or in his best interests. If Tideway had explained that Mr B could meet his objectives without risking his guaranteed pension, I think that would’ve carried significant weight. So, I don’t think Mr B would have insisted on transferring out of the DB schemes. In light of the above, I think Tideway should compensate Mr B for the unsuitable advice, in line with the regulator’s rules for calculating redress for non-compliant pension transfer advice. Putting things right As an initial matter, while I appreciate both Tideway and Mr B’s positions regarding what dates to use for the redress calculation – Tideway arguing that the past loss calculation for Pension 1 should stand and Mr B asserting that the loss calculation should be backdated even farther. And I’ve taken into account these comments, but the redress methodology set out by the regulator is based on the quarterly assumptions in place at the time the calculation is carried out. And as the previous calculation undertaken by Tideway is no longer valid, and Mr B hasn’t accepted these calculations in any event, I think it’s ultimately fair and reasonable that Tideway carries out a new calculation using the most recent assumptions. Tideway also argues that Mr B should have purchased an annuity after it provided him with the loss calculation for Pension 1. And Tideway feels by not buying an annuity Mr B isn’t bearing any responsibility. But I don’t agree. Mr B has disputed from the outset the results of the loss calculation. It is likely that Mr B will benefit from flexibility by virtue of the position he is in now, but that has only arisen because of the unsuitable advice. And ultimately the regulator has set out what it deems to be appropriate redress to put right instances of unsuitable defined benefit pension transfer advice. And I see no reason to depart from this in the circumstances of this complaint. Likewise, I also do not agree that Tideway should be permitted to offset gains that might exist as a result of one scheme transfer from the losses that might result from the transfer of the other schemes. This is not something this Service typically considers – largely because the aim of redress is to put the consumer as close as possible into the position they would be in if given suitable advice. In this case, but for the unsuitable advice, Mr B would have guaranteed benefits from three separate schemes. So, I consider it appropriate that each scheme should be assessed for loss and redressed individually. I’d also note that Tideway’s offset argument is only even possible because of how Mr B’s complaint has been brought. Each piece of advice could have been considered under a separate complaint. In which case, a separate loss assessment would be conducted and redress paid accordingly. So I don’t think it fair to change the redress methodology here, simply by virtue of one complaint being raised covering all the transfer advice. Fair compensation

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A fair and reasonable outcome would be for the business to put Mr B as far as possible, into the position he would now be in but for the unsuitable advice. I consider Mr B would have most likely remained in the occupational pension schemes if suitable advice had been given. Tideway must 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: https://www.handbook.fca.org.uk/handbook/DISP/App/4/?view=chapter. This should be done for each DB pension scheme separately. For clarity, Mr B retired at age 55 (which was his intended retirement age) and wanted to take benefits then if he’d been able to do so. And on balance, from the evidence provided, I’m satisfied this is what he would have done. So the calculation should assume Mr B took benefits from the DB schemes on that date, or the earliest point subsequently that he would have been permitted to. This calculation should be carried out using the most recent financial assumptions in line with DISP App 4. In accordance with the regulator’s expectations, this should be undertaken or submitted to an appropriate provider promptly following receipt of notification of Mr B’s acceptance of my decision. If the redress calculation demonstrates a loss, as explained in policy statement PS22/13 and set out in DISP App 4, for each DB scheme, Tideway should: • calculate and offer Mr B redress as a cash lump sum payment, • explain to Mr B before starting the redress calculation that: - their 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 - a straightforward way to invest their redress prudently is to use it to augment their DC pension • offer to calculate how much of any redress Mr B receives could be augmented rather than receiving it all as a cash lump sum, • if Mr B accepts Tideway’s offer to calculate how much of their redress could be augmented, request the necessary information and not charge Mr B for the calculation, even if he ultimately decides not to have any of their redress augmented, and • take a prudent approach when calculating how much redress could be augmented, given the inherent uncertainty around Mr B’s end-of-year tax position. Redress paid directly to Mr B 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), Tideway may make a notional deduction to allow for income tax that would otherwise have been paid. Mr B’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.

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Finally, Mr B has said that an assumption that he would have taken tax-free cash should not be made in the redress calculation for Pension 2 according to DISP App 4.5 Technical Guidance – FCA Handbook. He said Pension 2 was a hybrid DB/DC scheme and the DC part of the scheme could have fully funded his tax-free cash. Tideway should consider whether this exemption applies in its loss calculation relating to Pension 2. However, Mr B has accepted that the tax-free cash assumption should be used in loss assessments for Pensions 1 and 3 and I see no reason to depart from the FCA’s loss assessment guidance for these schemes. Where I uphold a complaint, I can award fair compensation of up to £195,000, plus any interest and/or costs that I consider are appropriate. Where I consider that fair compensation requires payment of an amount that might exceed £195,000, I may recommend that the business pays the balance. My final decision Determination and money award: I uphold this complaint and require Tideway Investment Partners LLP to pay Mr B the compensation amount as set out in the steps above, up to a maximum of £195,000. Recommendation: If the compensation amount exceeds £195,000, I also recommend that Tideway Investment Partners LLP pays Mr B the balance. If Mr B accepts this decision, the money award becomes binding on Tideway Investment Partners LLP. My recommendation would not be binding. Further, it’s unlikely that Mr B can accept my decision and go to court to ask for the balance. Mr B may want to consider getting independent legal advice before deciding whether to accept any final decision. Under the rules of the Financial Ombudsman Service, I’m required to ask Mr B to accept or reject my decision before 27 April 2026. Jennifer Wood Ombudsman

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