Whiting Group Limited · DRN-5840170

The complaint Mr B is represented. He says an Appointed Representative (‘AR’) of Whiting Group Limited (‘WGL’) gave him unsuitable advice in 2003 to transfer his Defined Benefits Pension (‘DBP’) into a Personal Pension arrangement. WGL disputes the complaint. It mainly says the AR advised Mr B against the DBP transfer, with warnings to him about its drawbacks and advice to him on an alternative way to achieve his objective, but he chose to go against advice and to proceed with the transfer. WGL also disputed our jurisdiction to address the complaint. An Ombudsman issued a Jurisdiction Decision on 13 June 2025 confirming we have jurisdiction. What happened Mr B approached the AR in early 2003 to explore early access to the DBP. He had already concluded the employment associated with the DBP, he was in a new profession and was around 10 years away from retirement. The AR’s 16 July 2003 advice letter says his objective was to get around £12,000 from the pension, in order to repay debts. He says he wanted to look into accessing cash from the DBP, but he was prepared for that to be dependent on advice on the pros and cons, and on whether (or not) it was in his best interest. The fact find (signed by both sides on 5 and 9 July) says – Mr B’s debt repayment objective was for the amount of £5,000; he had no need for additional income; he had a cautious risk profile [this is annotated on the document, with the date of 14 July]; his intended retirement age was 65; he was aware his retirement income could be reduced by taking benefits early; and he had little to no assets, but around £12,000 in debts. His representative adds that he had no disposable income and no investment experience at the time. The engagements between Mr B and the AR were mainly over the telephone and in written correspondence. The main consultation appears to have happened in a telephone conversation on 14 July – the same date as the signed fact find document was annotated in relation to risk profile. Mr B says he recalls being told, during this conversation, that he could access around £15,000 if he transferred the DBP. In addition to mentioning the debt repayment objective, the 16 July advice letter also said – • an alternative solution to Mr B’s objective was a personal loan; • left untouched until normal retirement, the DBP would provide around £13,500 in Tax Free Cash (‘TFC’), and its lifetime annual pension would be around £3,500 (including its protected rights element); • based on early access in 2003 the TFC would be around £15,500, annual lifetime pension would be around £934 and, separately, the protected rights element (payable from age 65) would be around £1,006; • “… by taking benefits now you could be giving up £1560.07 per annum of pension income at NRA

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However, you would not have to make loan repayments of £4846.56 per annum.”; • “Based on our analysis, in order to achieve your objectives, we recommend that you do not take early release of the pensions …”, leading to the recommendation that Mr B retain his DBP and apply for a personal loan instead. The letter’s conclusion included – “We do not recommend that you take early release of your pension funds … Despite this recommendation, you have instructed us to proceed with releasing the pension benefits we have investigated, even though we have pointed out that this course of action will reduce your long-term retirement income When you take pension benefits you normally have the opportunity to take a Tax Free Lump Sum … We strongly advise you to take the lump sum available and look at various ways to invest this sum to provide additional income. Please let us know if you would like any assistance with this investment advice. We enclose a copy of the Technical Report we have prepared for you … If you do instruct us to proceed with early release of pension benefits then please consider the context of this report …” The instruction given by Mr B is a document signed by him on 19 July. It is the Client Instruction document that the AR attached to the advice letter and technical report. Its contents were pre-drafted, so Mr B’s additions were only his signature and the date. Mr B’s representative says the advice and instruction letters are questionable. It says the AR essentially obscured and/or undermined the brief recommendation not to transfer with the offer to assist him in proceeding with the transfer; and that the AR sought to label him as an insistent client, but the facts don’t support that, the letter confirms there was already an agreement to proceed before the advice was issued. His representative also says – “The advice failed to explain the very significant value of a known and guaranteed future income stream as against the wholly uncertain benefits arising from a defined contribution scheme of any kind, dependent on a number of factors including investment performance over many years and the availability and /or pricing of an annuity at a particular point in time in the future (in respect of the protected rights element).” “The advice failed to give relevant prominence to the numerous and fundamental factors representing disadvantages of a transfer which on balance outweighed the advantages.” “[The AR] effectively treated [Mr B] as an insistent client. However, they did not communicate in a way which was clear, fair and not misleading to explain exactly why the transfer was not recommended and the risks associated with proceeding. ln the circumstances noted above, given the inadequacies in the advice provided (particularly the significant undervaluation of the defined benefit rights), it is alleged that [Mr B] was not in a property [sic] informed position to decide whether or not to proceed as an insistent client.” One of our investigators looked into the complaint and concluded it should be upheld. He broadly agreed with the arguments made by Mr B’s representative and referred to supporting facts in the case. He set out to the parties how redress for the unsuitable transfer should be approached by WGL.

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In summary, the investigator took the view that Mr B’s profile was such that he needed full and meaningful explanation of the aspects his representative referred to, but the AR did not provide that; that the AR also did not do enough to establish him as insistent, based on the regulatory expectations upon firms at the time of advice (in terms of customer’s instructing transfers against advice); that the advice against the transfer was undermined by how it was directly followed by guidance on how to proceed against the advice, making it easy for Mr B to follow that course of action; and it is highly likely he would have followed clear, firm and informing advice against the transfer, had that been what the AR gave him. WGL disputed the investigator’s view and asked for an Ombudsman’s decision. It mainly says – the fact find document confirms Mr B had an extremely urgent need for cash for his debt repayment objective; criticism of the AR for making it easy for him to proceed is unfair, because if it had not made the process simple and straightforward for him it could have been accused on not upholding his best interests; any reasonable view of the facts must conclude he was fully aware he was acting against advice; criticism of the instruction letter for being the AR’s template, as opposed to instructions in Mr B’s own words, is also unfair because the former was common at the time of advice; all the responsibility cannot fairly rest on the AR, Mr B should hold some personal reasonability for knowingly acting against the advice he received (and not even querying the advice before doing so). The matter was referred to an Ombudsman. 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 regulator’s Handbook includes Principles for Businesses. As they were in 2003, Principles 2 and 6 required, in broad terms, firms to conduct their services with due skill, care and diligence, and to uphold their customers’ interests and treat them fairly. There is case law – Ouseley J, in R (British Bankers Association) v Financial Services Authority [2011] EWHC 999 (Admin) – which also confirms that The Principles are ever present requirements that firms must comply with. Therefore, these obligations were part of the AR’s overarching responsibility in its advice to Mr B. In 2003, the rules in the Handbook’s Conduct of Business Sourcebook (‘COBS’) section – which firms must follow in their regulated activities – included provisions for the specific matter of pension transfer advice. COBS 5.3.25R said – “If, contrary to the advice of the firm, a private customer instructs the firm to arrange a pension opt-out or pension transfer, the firm must: (1) make and retain a clear record of the firm's advice that the private customer should not proceed with the pension opt-out or pension transfer and the private customer's instructions to proceed with the transaction; and (2) provide a further confirmation and explanation, in writing, to the private customer that the firm's advice is that the private customer should not proceed with the pension opt- out or pension transfer.” It is undisputed that the AR’s advice to Mr B included a recommendation not to conduct the DBP transfer, so it is not necessary to go into detail on the merits or otherwise of the transfer – because both parties essentially agree that it was unsuitable.

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Where the parties differ are – Mr B and his representative say the advice against the transfer was meaningless, or at least undermined, because the AR nevertheless steered him towards making the transfer, but WGL disagrees; WGL says the advice was meaningful and that Mr B was an insistent client who knowingly went against the AR’s advice, but Mr B and his representative disagree. The aforementioned Principles and rules required, at the time of advice, that the AR uphold Mr B’s interests in the matter, that its advice to him be conducted with due skill, care and diligence and that having concluded its advice against the transfer it conveyed this to him in its advice and then again in “further communication and explanation, in writing” if/where he gave “instructions to proceed” with the transfer. There seems to be a claim, or at least a suggestion, in WGL’s position that the AR’s advice against the transfer was delivered during the telephone consultation with Mr B on 14 July. If this is WGL’s position, evidence presents a conflict with the claim or suggestion. The 16 July advice letter is the only advice letter sent to Mr B before the instruction he signed on 19 July. For this reason, and with regards to the requirement in COBS 5.3.25R for advice against a transfer to be repeated in writing, it appears the 16 July letter would have to be the repetition. If so, there would need to be initial advice against the transfer before that. The AR’s documentation for the advice creates some confusion. The fact find document Mr B signed on 5 July is purely a fact-finding form, which he appears to have completed and returned to the AR (who signed it afterwards, on 9 July), so there is no room to claim it is a record of advice. The 14 July document is undersigned only by the AR. It is presented as another fact find document (a “Fact Find Checklist” form), so the implication is that record, in the document, of the telephone conversation with Mr B on this date was also for fact-finding purposes. It was not “clear record of the firm’s advice” as stated in COBS 5.3.25R, so this creates an obstacle in claiming this document serves as record of advice to him. The document refers to the objective to repay the total of £12,000 in debts, amongst other fact-finding information, but, somewhat confusingly, there is also reference to Mr B supposedly agreeing to the option “Wants to proceed with report” (as opposed to the option “Wants figures to consider before proceeding”). The advice letter and enclosed technical report were not issued to him until two days later, so he is unlikely to have wanted to proceed with them before he had seen them. The idea of proceeding would also suggest that a transfer was recommended during the 14 July call – given that Mr B did not seek advice on, and did not proceed with, anything else – but, contrary to that, the 16 July letter advised against the transfer. The 16 July advice letter was sent with the 16 July technical report, the former advised against the transfer (with some conflicting content, which I address below) and the latter presented a report on the options for accessing Mr B’s pension early, including the option of a transfer. Thus far, and on balance, my conclusion is that the AR did not fulfil the requirement in COBS 5.3.25R. There is only one ‘clear’ record of its advice against the transfer – the 16 July letter – the 14 July document is not such record, and there is no evidence of any further confirmation and explanation, in writing of the advice that followed after 16 July. I also consider that there is a possibility that, despite what the 16 July letter would go on to

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say, during the 14 July conversation Mr B might have been steered towards making the DBP transfer. References, in the 14 July document, to him supposedly wanting to proceed with a report (presumably the technical report on accessing his pension early (including a transfer) that had yet to be issued to him) suggests this. If so, and given evidence, in its advice letter, that the AR knew a transfer was against his interests no such steer should have been given. The advice letter is split into sections. There is an introduction to the AR’s approach towards the advice, followed by a section on Mr B’s objectives, which ends by noting that his options were early access to his pension or a personal loan. The next two sections are about the personal loan option. Then the two sections after that are about the option of accessing his pension early, with a comparison between the benefits available at the time and those that would be available if the pension was retained until normal retirement. The comparison ends by saying – “… by taking benefits now you could be giving up £1560.07 per annum of pension income at NRA. However, you would not have to make loan repayments of £4846.56 per annum.” On balance, I consider this conclusion to have been unhelpful, with potential within it to unduly influence Mr B towards the transfer. The fact find he signed already stated that he had considered and discounted (as being not of interest to him) a personal loan, and that he wanted advice on using the pension, so it is not quite clear why a personal loan was being used in this comparison. He wanted advice only on using the pension. I can understand that the AR took the view that Mr B should consider/reconsider a personal loan but there was no call for that to feature in the comparisons. The only comparison relevant to Mr B’s request for advice on using the pension was that between accessing the pension in 2003 and accessing it at his normal retirement age, which the letter already addressed. By extending the comparison to how much loan repayments would cost, he was arguably being led to view the matter wrongly. The above quote told him he would lose much more in loan repayments than in the pension benefits he was giving up, but the loss of pension benefits should have been the only or main lasting message for him to consider. That message was obscured by, and the loss of pension benefits looked better against, the much higher loss in loan repayments. However, the latter was irrelevant to the former, so Mr B’s consideration was probably misdirected by this. The message also did not explain the common advantages of retaining a DBP over a transfer to a personal pension – most importantly, the defined nature of its benefits over the uncertain, investment performance dependent and annuity rate dependent benefits from a personal pension arrangement. The letter mentions the AR’s belief that the long-term pension benefits of the DBP were worth keeping to support future income needs, but no explanation of the reason(s) why appears to have been given. Some confusion then appears towards the conclusion of the letter. I quoted the concluding paragraphs in the background section above. The first of those paragraphs refers to an instruction from Mr B going against the AR’s advice. I cannot see how this would have been possible. He did not sign the instruction letter until 19 July, three days after the 16 July letter, and there is no record of an instruction from him prior to the 16 July advice letter. Furthermore, the same section then reads as though Mr B was yet to make his decision, where it says – “We enclose a copy of the Technical Report we have prepared for you … If you do instruct us to proceed with early release of pension benefits then please consider the context of this report …” [my emphasis]. Therefore, the same section that says Mr B had instructed early release, also says his instruction was being awaited.

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Then there is a form of advice from the AR in aid of the very same early release that it was advising against – “When you take pension benefits you normally have the opportunity to take a Tax Free Lump Sum … We strongly advise you to take the lump sum available and look at various ways to invest this sum to provide additional income. Please let us know if you would like any assistance with this investment advice.” [my emphasis] Taking all the above into account, I am persuaded that it is more likely (than not) that Mr B was led by the AR into selecting the early release/DBP transfer option, and I do not find that he was an insistent client. As I addressed above, the options he was presented with probably misdirected him, and I get the impression that he probably felt he was choosing between the transfer and a personal loan (which he never wanted from the outset), whereas he should have been choosing between early access/transfer and no early access/no transfer. I agree with the investigator’s observations about the instruction letter. I note WGL’s response, but I think it might have missed the point the investigator sought to make. If Mr B is to be labelled an insistent client his ‘insistence’ at the time of advice must surely be established. It is difficult to do that where there is nothing from him, in his own words, displaying such insistence. Instead, and I repeat, he appears to have done no more than select between a DBP transfer and a personal loan, which is not the same as evidencing insistence to proceed against advice. In the above context, and in response to WGL’s argument about his personal responsibility, I am not persuaded that Mr B shares fault for the unsuitable DBP transfer. It is neither disputed nor ignored that the advice he received included content that advised against the transfer, but all the matters I have treated shows that the situation was/is not as simple as that, and shows that he probably did not consider himself to be going against advice. After all, he was being told that the personal loan option would cost him more than he would lose in the early pension access option, so he chose the early pension access option. This is distinctly different from him receiving focused and non-conflicting advice that made clear, with reasons, that a DBP transfer was unsuitable and, in the main, left it at that. Potential alternative solutions to his objective could have been mentioned and/or advised, but that would have been separate to the conclusion that the DBP transfer was unsuitable. If, after such clear and focused advice, Mr B wrote to the AR insisting on going against the advice, perhaps with reasons, and if the AR agreed to facilitate only – as opposed to giving advice on taking TFC in the transfer (as it did) – there could then be scope to consider him as being either insistent or as partly responsible. However, this scenario did not happen in his case. I am persuaded that Mr B sought and needed advice at the time, and that he would have followed suitable advice to retain his DBP if he was told to (in the type of focused, non- conflicting and clear advice I addressed above). WGL might argue that the facts show he had a tendency to go against advice, but I disagree. I have already explained that what might initially appear as him going against the AR’s advice was instead, and with due weight given to the aspects and evidence treated above, probably him believing he was choosing one of the two options the AR presented to him (with unhelpful influence from the comparison to select the pension transfer option). Overall, on balance and for all the reasons give above, I conclude that Mr B’s complaint is upheld and that the AR gave him unsuitable overall advice that resulted in the DBP transfer. Putting things right fair compensation

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A fair and reasonable outcome would be for WGL to put Mr B, as far as possible, into the position he would now be in but for the unsuitable advice from the AR. I consider he would have likely remained in the occupational scheme. WGL should therefore undertake a redress calculation in line with the rules for calculating redress for non-compliant pension transfer advice, as detailed in Policy Statement PS22/13 and set out in the regulator’s handbook in DISP App 4. Mr B says he would have wanted to take benefits at his intended retirement age (on the date he turned 65) had he been able to do so. On balance, I am satisfied from the evidence that this is what he would have done. So the calculation should assume Mr B took benefits from the DB scheme 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 PS22/13 and DISP App 4. In accordance with the regulator’s expectations, the calculation should be undertaken or submitted to an appropriate provider promptly following receipt of notification of Mr B’s acceptance. If the redress calculation demonstrates a loss, as explained in PS22/13 and set out in DISP App 4, WGL should: • calculate and offer Mr B redress as a cash lump sum payment, • explain to Mr B before starting the redress calculation that: o redress will be calculated on the basis that it will be invested prudently (in line with the cautious investment return assumption used in the calculation), and o a straightforward way to invest the redress prudently is to use it to augment the current defined contribution pension • offer to calculate how much of any redress Mr B receives could be used to augment the pension rather than receiving it all as a cash lump sum, • if Mr B accepts WGL’s offer to calculate how much of the 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 the 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), WGL 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. compensation limit Where I uphold a complaint, I can make a money award requiring a financial business to pay compensation of up to £150,000, £160,000, £170,000, £190,000, £195,000, £200,000,

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£350,000, £355,000, £375,000, £415,000, £430,000 or £445,000 (depending on when the complaint event occurred and when the complaint was referred to us) plus any interest that I consider appropriate. If fair compensation exceeds the compensation limit the respondent firm may be asked to pay the balance. Payment of such balance is not part of my determination or award. It is not binding on the respondent firm and it is unlikely that a complainant can accept my decision and go to court to ask for such balance. A complainant may therefore want to consider getting independent legal advice in this respect before deciding whether to accept the decision. In Mr B’s case, the complaint event occurred before 1 April 2019 and the complaint was referred to us after 1 April 2024 but before 1 April 2025, so the applicable compensation limit would be £195,000. My final decision For the reasons given above, I uphold Mr B’s complaint. I order Whiting Group Limited to calculate and pay him redress as set out above. Under the rules of the Financial Ombudsman Service, I’m required to ask Mr B to accept or reject my decision before 3 November 2025. Roy Kuku Ombudsman

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