Greyfriars Preferred Retirement Account · CAS-45466-N2D2

CAS-45466-N2D2

Ombudsman’s Determination Applicant Mr T

Scheme Greyfriars Preferred Retirement Account (the Plan)

Respondent Hartley Pensions Limited (Hartley)

Outcome

Complaint summary

1 Stephen Corbett Hartley Pensions Limited CAS-45466-N2D2

Background information, including submissions from the parties

Mr T had also agreed an annual advice charge from the Plan payable to his financial adviser, T M Financial Management Limited (the Adviser), of £500.

One of the Plan’s investments was in Alpha Business Centres Bonds (the ABC Bond), which went into insolvency administration (Administration) on 20 January 2017.

In October 2018, Greyfriars itself entered Administration and the Plan was novated to Hartley. Hartley did not accept any of Greyfriars’ liabilities that existed prior to the novation, but said that Greyfriars’ existing terms and conditions were otherwise unchanged.

In March 2019, £1,536.47 was deducted from the Plan Bank Account, of which £967.89 was paid to Insight Financial Advisers (Insight), an IFA with whom Mr T had no connection, and £568.58 was retained by Hartley. The Adviser contacted Hartley asking for the deduction to be explained and for any part of it that related to an advice fee to be refunded immediately. The advice fee of £967.89 was ultimately refunded in November 2019.

1 Appendix 1

2 CAS-45466-N2D2 On 29 March 2019, Mr T applied to take a Pension Commencement Lump Sum benefit payment (PCLS) of £22,000 from the Plan, which he wanted to receive by 15 May 2019. Hartley received the request on 2 April 2019.

On 11 April 2019, Mr T and the Adviser sought an update on the explanation for the deduction in March 2019 and also on Mr T’s PCLS application. Following a further reminder on 23 April 2019, Hartley confirmed that the AMC basis for the Plan was 0.5% plus VAT of the first £500,000 of the Plan value, but with an additional 0.25% plus VAT charged on the value in excess of £500,000. The Adviser was of the view that the AMC was excessive, given that Hartley was not providing any of the advisory services previously provided by Greyfriars. It proposed that Hartley should refund any fees charged and reduce its annual fee to £500 plus VAT. It sought a new fee agreement for Mr T which removed the advisory element from the charging structure.

On 10 May 2019, the Adviser chased Hartley for its response regarding a revised fee structure for the Plan or guidance as to how to transfer it to a more suitable alternative.

On 18 June 2019, Mr T complained to Hartley (the June 2019 Complaint) that:

13.1. The PCLS requested on 29 March 2019 had not yet been paid.

13.2. No six-monthly valuations had been received since novation to Hartley.

13.3. The AMC paid previously to Greyfriars included advisory services which Hartley was unable to provide. He had received no service and no advice from Hartley so the fees should be refunded in full.

13.4. Hartley had deducted money from the Plan and paid it to Insight without his consent.

13.5. He had received no response to his question of 23 April 2019 and reminder of 10 May 2019 regarding Hartley’s fee structure and alternatives to it.

13.6. A rights issue connected to the M&S shares had not been communicated, causing him to spend time rectifying, almost losing the opportunity. When Mr T took up the rights issue, Hartley sent a cheque to M&S that should have been sent to the Registrar.

13.7. It was a concern that Hartley did not operate a cheque book for the Plan as not all transactions could be made by BACS.

13.8. Given the problems he had experienced and his consequent lack of confidence in Hartley, he was considering transferring the value of the Plan elsewhere. He was aware of a liquidity issue with the Plan’s investment in the ABC Bond and requested Hartley’s views on how this could be resolved so that a transfer could be facilitated.

The PCLS benefit, requested in March 2019, was paid to Mr T on 26 June 2019. Mr T said the delay was the cause of financial embarrassment to him. 3 CAS-45466-N2D2 Hartley’s complaint response

Hartley’s final response to the June 2019 Complaint was issued on 2 October 2019, eleven weeks after the date of acknowledgement. Its response is summarised below:

15.1. Hartley accepted there had been delays in processing Mr T’s request for a PCLS payment and apologised for it.

15.2. Greyfriars provided two valuations of the Plan per year and this was included in its annual fee. In contrast, Hartley did not automatically provide any valuations, but any number of valuations requested could be provided without additional charge.

15.3. Hartley did not issue regular communications except for annual statements. Otherwise, it would respond to specific requests. It accepted there had been delays in responding to the Adviser’s requests and that the 2019 annual statement had not yet been issued.

15.4. It referred to the standard fee agreement Mr T had signed with Greyfriars in May 2019, listing the services provided, which included an advice charge. Hartley confirmed that it did not provide advice but that the advice element had been taken over by Insight, who should have disclosed the advice fees to him.

15.5. As the ABC Bond was illiquid and valued at a notional £1, it could not be transferred to another pension plan, so the Plan would have to remain open, with charges continuing.

Mr T then complained to The Pensions Ombudsman (TPO), via the Financial Ombudsman Service (FOS), on 7 October 2019. TPO requested Hartley’s formal response to the complaint on 26 October 2020, 14 December 2020 and 14 May 2021. Hartley failed to respond to any of these requests.

Meanwhile, a further advice fee of £1,106.27 was paid to Insight on 6 January 2021 without any reference to Mr T. The fee was refunded and Mr T accepted £75 from Hartley as compensation for the error.

In October 2021, the Financial Services Compensation Scheme (FSCS) compensated Mr T, in full, for the loss of the value of the ABC Bond. Mr T paid the compensation into the Plan. As a condition of acceptance of the FSCS compensation, Mr T assigned his right to any future recovery from the ABC Bond to the FSCS. The investment remained in the Plan although Mr T has no right to the value of it. Mr T said no illiquid investments, other than the ABC Bond, remained in the Plan after October 2021.

On 29 July 2022, Hartley then entered Administration, with UHY Hacker Young (UHY) appointed as Administrator. Since then, it has issued a number of updates to those who have been unable to transfer their SIPPs to a new provider due to the presence

4 CAS-45466-N2D2 of impaired or illiquid assets, which I have summarised in paragraphs 19.1 to 19.4, below:

19.1. 17 July 2024: SIPPs in drawdown containing “both liquid or standard assets and impaired or toxic assets” could not be partially transferred.

19.2. 9 September 2024: SIPPs that included investments on which the FSCS had previously paid out compensation, referred to as “impaired assets”, remained as illiquid assets in the SIPPs. UHY was working with the FSCS, and their legal advisers, to establish the best course of action regarding the impaired assets. Until an agreement was reached, SIPPs would remain open. It was hoped to have an update on a course of action “within the coming months”.

19.3. 19 December 2024: the expected date for further information on a course of action for impaired assets was postponed until March 2025.

19.4. 10 June 2025: there were 7,974 SIPPs holding impaired assets which could not be transferred to a new provider. A strategy document had been drafted and there were ongoing discussions with HM Revenue and Customs (“HMRC”) and the FSCS with a view to resolving how these assets could be dealt with. This might mean writing down or writing off the impaired assets with the consent of the SIPP members and HMRC.

Adjudicator’s Opinion

Complaint 1: Advice fees

5 CAS-45466-N2D2 Complaint 2: Annual Management Charges

6 CAS-45466-N2D2 Complaint 3: Failure to progress Mr T’s transfer request

Complaint 4: Failure to provide satisfactory level of customer service

7 CAS-45466-N2D2

Complaint 5: Compensation for time wasted and formal apology

Hartley’s response to the Adjudicator’s Opinion and new information

Hartley did not accept the Adjudicator’s Opinion and provided new information regarding the Adjudicator’s view in paragraph 30 above, of action required in relation to Complaint 2, the AMC.

The new information provided by Hartley was:

39.1. In May 2021, it came to an agreement with Mr T for a revised AMC of £500 plus VAT (the AMC Agreement) and this was formalised by way of an acceptance email from the Adviser. The excess AMC that was collected by Hartley in 2021 was refunded. 8 CAS-45466-N2D2 39.2. The AMC for the Plan in 2019 and 2020 was £568.58. The charge for 2020 was not paid. Despite having agreed to reduce the AMC to £500.00 plus VAT in 2021, Hartley billed the following amounts to the Plan:-

£4,501.25 in 2021; £1,382.40 in 2022; £1,382.40 in 2023; and £1,382.40 in 2024.

39.3. The fees billed in 2020, 2023 and 2024 were not paid, either in full or at all, as there were insufficient funds in the Plan Bank Account, so they could not be deducted automatically. The AMCs that were paid, inclusive of VAT, were as follows:-

£568.58 in 2019; £4,501.25 in 2021, of which £3,901.25 was refunded; £1,382.40 in 2022; £424.48 in 2023; and £0 in 2024.

39.4. Had the AMC been billed to the Plan correctly, the total billed from 2019 to 2024 inclusive, would have been £3,537.16. The total paid from the Plan, and not refunded, for the same period was £2,975.46. So, up to and including 2024, the total AMC had been underpaid by £561.70.

As Hartley had already addressed one of the key findings against it in the Adjudicator’s Opinion, the Adjudicator invited Hartley to reconsider if a resolution was possible in relation to the remainder of Mr T’s complaint. Hartley did not agree to revisit its position.

Mr T’s further submissions

The new information in paragraphs 39 and 40, above, was shared with Mr T. As the Adjudicator was of the view that Hartley had already addressed the part of Mr T’s complaint where TPO might have provided a meaningful remedy, he reminded Mr T that Hartley might not have the means to meet any financial award made against it. He also reminded Mr T that Hartley might not have the autonomy to comply with any directions in relation to the disposal of the ABC Bond, given that it was involved in discussions about its disposal with HMRC, the FCA and the FSCS.

Mr T acknowledged that he was aware of the AMC Agreement to which paragraph 39, above, refers, although he had not disclosed it to TPO. However, Hartley had continued to invoice for higher charges to the Plan and in Mr T’s view, would have continued to deduct the higher amounts, had he not limited the cash available in the Plan Bank Account. He was not convinced that Hartley would ever abide by the AMC Agreement or that UHY would consider itself bound by it.

9 CAS-45466-N2D2 Mr T remained concerned that the longer the Plan remained open with Hartley, the longer it remained open to abuse, in particular the deduction of charges without his consent. He remained of the view that the only way to end this potential for abuse was to proceed with the transfer to a new plan.

As Hartley did not accept the Adjudicator’s Opinion and Mr T was of the view that his complaint should be determined by an Ombudsman, the complaint was passed to me to consider.

Ombudsman’s decision

Complaints 1, 4 and 5: Advice fees, failure to provide satisfactory level of customer service and compensation for time wasted and formal apology

Complaint 2: Annual Management Charges

10 CAS-45466-N2D2

Complaint 3: Failure to progress the transfer request

11 CAS-45466-N2D2

Directions

2 For example, see Westminster City Council v Haywood [1996] 2 All ER 467 (obiter), as confirmed in City and County of Swansea v Johnson [1999] 17 PBLR, and in also later cases. 3 Following Baugniet v Capita Employee Benefits [2017] EWHC 501 (Ch) and Smith v Sheffield Teaching Hospitals [2018] 004 PBLR 004 (011) 4 See: https://www.pensions-ombudsman.org.uk/sites/default/files/publication/files/Updated-Non-financial- injustice-September-2018-2_0.pdf 12 CAS-45466-N2D2

Dominic Harris

Pensions Ombudsman 24 March 2026

13 CAS-45466-N2D2 Appendix 1 – Greyfriars Letter of Engagement: Client Agreement

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