JLT Wealth Management Limited · DRN-5732954

The complaint Ms S, through her representative, complains that the advice she received from JLT Wealth Management Limited to transfer her Occupational Pension Scheme (OPS) defined benefit pension to a personal pension plan was unsuitable. What happened Ms S’ complaint was considered by one of our investigators. She sent her assessment of the complaint to both parties on 30 June 2025. The background and circumstances to the complaint were set out in that assessment and are known to both parties. However to recap, Ms S was a deferred member of her defined benefit (DB) occupational pension scheme. The scheme was in deficit and didn’t have enough funds to pay full transfer values to its members. In 2009, Ms S’ former employer offered scheme members enhanced cash equivalent transfer values (CETV) to consider transferring out of it. The employer engaged a firm JLT has since acquired (I will refer to JLT through the decision for ease of understanding) to offer advice to scheme members about the suitability of a transfer. The employer paid JLT’s fees and it did not receive any commission for arranging the transfer. JLT gathered information about Ms S’ DB scheme entitlements. It asked her to complete a Personal Priorities Questionnaire. The information gathered included: • Ms S was in her mid-forties, co habiting, with two dependent children. • Ms S indicated that she would like pension death benefits paid as a lump sum, that she would like maximum tax-free cash at retirement, and that she would like to repay her mortgage by retirement. • The DB scheme was Ms S’ only pension and this wasn’t receiving contributions. • It was Ms S’ intention to use the additional cash lump sum from the scheme trustees if she transferred for home improvements and a holiday. • Ms S confirmed she was risk averse and not prepared to expose her retirement benefits to elements of risk. She also confirmed that in terms of her pension she was comfortable of having no real risk of either investment loss or gain. • Ms S indicated she was happy for 60% of her pension to be invested in low risk and 40% in medium risk, moderate tolerance to volatility, and that she had minimal investment experience. • Ms S understood risk and reward. Ms S’ employer wrote to her on 30 April 2009 with additional information about the offer available if she transferred her DB scheme. At the time the reduced transfer value was £19,965. It offered a transfer value of £24,020, and an additional cash sum of £4,671 if taken as cash, £6,005 if invested in the pension. This offer was available until 22 June 2009. On 8 May 2009, and following a telephone call between Ms S and JLT, the answers in the Personal Priorities Questionnaire were amended. A copy was included in a letter sent to Ms S. This recorded that Ms S wanted to achieve moderate returns to improve her retirement benefits and was prepared to tolerate a small amount of risk to achieve this. On 8 June 2009, a Focussed Advice Recommendation report was sent to Ms S setting

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out JLT’s advice and recommendations. There was no section in the report that detailed Ms S’ objectives. However the report said: • She would like pension benefits paid to her dependents as a lump sum. • She would like to take maximum tax-free cash on retirement. The Focus Advice Recommendation report included the calculation of the level of growth required each year from the new pension to allow Ms S to buy pension benefits at retirement equivalent to those that she was giving up (‘critical yield’). This was 6.7% assuming she took tax-free cash (TFC), to age 65 and based on the maximum enhanced transfer value, and 7.9% if Ms S took the enhancement as cash and invested the original transfer value. JLT’s recommendation was to not transfer the DB scheme to a personal pension arrangement. The recommendation said it was based exclusively on whether the critical yield was achievable on a year-by-year basis, considering Ms S’ tolerance to risk. On 23 June 2009, JLT wrote to Ms S. It said if Ms S decided to go against its advice to transfer her DB scheme, she should take note of the warnings contained in the letter. Included with the letter were all documents Ms S needed to complete to apply for the personal pension plan that would receive the transfer value from the DB scheme. On 3 July 2009, JLT acknowledged receipt of the completed application form for the personal pension plan. It said it accepted Ms S’ instruction to transfer the DB scheme, but that JLT did not accept responsibility for the decision to transfer, as Ms S hadn’t followed its advice. The personal pension plan started in September 2009 and received the transfer value of £24,020 which was invested in the cash fund. Ms S’ representative complained to the firm on her behalf on 19 December 2023. JLT responded to say that it didn’t think the complaint had been made in time, and that the merits of the complaint would not be considered. The complaint was subsequently referred to us. One of our investigators considered Ms S’ complaint. She thought it should be upheld. The investigator said she’d taken into account relevant law and regulations, regulator’s rules, guidance and standards and codes of practice, and what she considered to have been good industry practice at the time of the advice. And this included the Principles for Business (‘PRIN’) and the Conduct of Business Sourcebook (‘COBS’) which provided: 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 investigator said the provisions in COBS 19 specifically related to a DB pension transfer. These included, but were not limited to: COBS 19.1.2R A firm must:

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(1) compare the benefits likely (on reasonable assumptions) to be paid under a defined benefits pension scheme with the benefits afforded by a personal pension scheme or stakeholder pension scheme, before it advises a retail client to transfer out of a defined benefits pension scheme; (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, 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. And COBS 19.1.6G When advising a retail client who is, or is eligible to be, a member of a defined benefits occupational pension scheme whether to transfer or opt-out, a firm should start by assuming that a transfer or opt-out will not be suitable. A firm should only then consider a transfer or opt-out to be suitable if it can clearly demonstrate, on contemporary evidence, that the transfer or opt-out is in the client's best interests. The advice The investigator accepted that JLT had recommended that Ms S not transfer her benefits away from her DB scheme. She said she agreed that a transfer was not in Ms S’ best interests. The investigator said Ms S had initially said she was risk averse and not prepared to expose her retirement benefits to elements of risk. But had later said she would accept a small amount of risk. However the investigator said there was no record of the reasons why there was a change in attitude to risk. The investigator said in any event, transferring Ms S’ DB scheme involved trading a guaranteed pension and exposing it to investment risk which she didn’t think was suitable for a cautious investor. The investigator said Ms S had mentioned she would want to access TFC at retirement, however this was something she could do if she remained in her DB scheme. Ms S had also mentioned she wanted to leave her pension to her dependents as a lump sum. However the investigator said a pension was primarily intended to be used to provide benefits in retirement. She said if Ms S had strong opinions on leaving a lump sum she could have arranged a life insurance policy and retained the valuable guarantees provided by the DB scheme. The investigator said the advice had been given during the period when the Financial Ombudsman Service was publishing 'discount rates' on our website for use in loss assessments where a complaint about a past pension transfer was being upheld. She said whilst businesses weren't required to refer to these rates when giving advice on pension transfers, she thought they provided a useful indication of what growth rates would have been considered reasonably achievable when the advice was given in this case. The investment return (critical yield) required to match the DB scheme at retirement was 7.9% per year when only investing the existing transfer value (Ms S took the enhancement as cash). She said this compared with the discount rate of 6.7% per year for 20 years to retirement in this case. And for further comparison, the regulator's upper projection rate at

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the time was 9%, the middle projection rate 7%, and the lower projection rate 5%. The investigator said she’d taken this into account, along with the composition of assets in the discount rate, Ms S’ attitude to risk and also the term to retirement. She said she thought Ms S was likely to receive benefits of a materially lower overall value than the DB scheme at retirement, as a result of investing in line with her attitude to risk. So, the investigator thought JLT was correct to recommend that Ms S not transfer her benefits. However, the investigator didn’t think the information Ms S was provided with was clear enough for her to fully understand the risks involved, and in particular what she was giving up or to make an informed decision. The investigator said Ms S had told our service that she didn’t have any real understanding of the information contained within the recommendation report; this was provided on paper, but was never discussed in person, and her understanding was never checked tested or challenged. The investigator said she didn’t think the information JLT provided went far enough to clearly explain everything Ms S ought reasonably to have been made aware of. She said whilst the suitability report included the critical yields and what the DB pension could provide at retirement date, there was no comment on what Ms S might receive from a personal pension by transferring – including if the critical yield required wasn’t achieved. The investigator thought this was important information that JLT needed to make sure Ms S understood. The investigator said that in her view the sole reason that Ms S seemed to have been considering a transfer as noted in the fact find and the suitability report, was to receive the enhancement as cash. She said Ms S told our service that she used this to install new windows, and recollects using anything remaining towards the purchase of a second-hand car; neither of which the investigator said were a necessity. The investigator said it wasn’t considered whether this sum was truly needed, or what alternative – other than making an irreversible change to her retirement provisions, which JLT seems to agree was not in her best interests – was available to achieve this. The investigator thought this should’ve formed part of the reasoning for JLT’s advice – to give Ms S a full understanding of the choice being put to her, particularly as Ms S had minimal investment experience. The investigator said whilst she agreed that transferring wasn’t suitable, she didn’t think the advice and information given by JLT was clear enough for Ms S to make an informed decision about transferring. Insistent client The investigator said JLT had treated Ms S as an insistent client after she decided to act differently than advised. She said at the time of the advice there was no regulatory advice or guidance in place in respect of insistent clients. But there were Conduct of Business Sourcebook (‘COBS’) rules in the Regulator’s Handbook which required JLT to ‘act honestly, fairly and professionally in accordance with the best interests of its client’. And JLT was required to provide information that was clear, fair and not misleading. So, JLT’s recommendation had to be clear and Ms S had to have understood the consequences of going against the recommendation. The investigator said in her view it had been good industry practice for a firm to document

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why a customer wanted to go ahead with a transaction against an adviser’s recommendation. She said she would have expected a note from the consumer in their own writing being the best way of demonstrating this. She said providing a letter in her own words would’ve highlighted to JLT whether Ms S had appropriately understood the recommendation being made and why she wanted to proceed with the transfer. The investigator said in the case there was no documentary evidence why Ms S wanted to go ahead with the transfer against the firm’s recommendation. Or that there was any attempt on the part of JLT to understand why Ms S wanted to transfer her DB scheme. The investigator said Ms S was an inexperienced investor, seeking financial advice. And as explained, she didn’t think Ms S was provided with all of the information she needed in order to make an informed decision about the advice. The investigator didn’t consider Ms S was put in an informed position to decide whether she wanted to be an insistent client. And she wasn’t persuaded Ms S truly was an insistent client. Would Ms S have acted differently? The investigator said that whilst she thought there were failings in the process used by JLT, she had to consider whether Ms S would likely have gone ahead with a transfer anyway if clearer advice had been given, and Ms S hadn’t been prompted to consider acting on an insistent client basis. The investigator said the ability to access the enhancement as a cash sum clearly played a part in Ms S’ decision. She said she’d thought about whether Ms S would always have sought to access this money. The investigator said she’d seen nothing to suggest Ms S had an urgent need for the money or that she couldn’t have obtained a similar sum through other means – such as a loan – had it actually been needed. So she didn’t think Ms S’ desire to access the cash sum was so great that she’d have always sought to do so – particularly if she’d better understood the value of the benefits she was giving up. The investigator said it was unusual for a lay person to go against the recommendations received from a professional adviser, and there was no record of the reasons for Ms S’ decision to go against that advice. She didn’t agree it was in Ms S’ best interests to go against the recommendation – but as the suitability letter contained instructions on how Ms S could ignore the recommendation – it made it very easy for her to do so. The investigator said overall, she thought as an inexperienced investor only willing to accept a small degree of risk, and had Ms S been provided with more appropriate and robust advice around why the transfer was not suitable and had the reason why she wanted to transfer been explored, she didn’t think Ms S would likely have gone ahead and given up such valuable benefits. She said she thought Ms S had likely been swayed by the enhanced cash sum, but without fully understanding what she was giving up. And that if JLT had provided clearer information and reasoning, so that she fully understood the long-term implications involved in transferring her DB scheme, the investigator thought it was more likely than not she would have acted differently and not transferred. JLT didn’t agree with the investigator’s findings. It referred to another final decision made by this service that had found a client had been an insistent client and the complaint had been rejected. It said it expected the Ombudsman Service to be consistent in its decision making. The investigator responded to say that Our Service considered cases on their own individual merits. In respect of the other case, she said the circumstances were different: • the consumer was a skilled professional and the DB pension was one of four pensions.

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• In the other case there were a number of calls between the consumer and JLT where the consumer’s understanding of the risks of transferring the DB scheme were checked. • There was no discussion in Ms S’ case as to why she wanted the cash lump sum, unlike in the other case. 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. Having done so I’ve come to the same conclusions as the investigator, and for the same reasons. As the investigator said, the Regulator’s Principles required JLT to pay due regard to the interests of Ms S and treat her fairly; pay due regard to her information needs and communicate information to her in a way which was clear, fair and not misleading. And its Conduct of Business Sourcebook rules required it to act honestly, fairly and professionally in accordance with Ms S’ best interests. I recognise that JLT advised Ms S not to transfer. In my opinion that was the correct advice, as the transfer wasn’t suitable for Ms S’ circumstances for the reasons set out by the investigator. So that was in line with the Principles and COBS rules. However it then facilitated the transfer through the simple process of Ms S completing forms enclosed with its 23 June 2009 letter. I accept it provided written warnings in this letter and subsequently. However for the reasons outlined by the investigator, it didn’t ensure Ms S fully understood all the implications of going against its advice or provide sufficient information to allow Ms S to make an informed decision. Clearly a cash lump sum paid outside of the pension and before retirement age would have appeared an attractive proposition to Ms S. So it was incumbent on the firm to explain all the advantages and disadvantages of a transfer, and in particular putting the value of taking that cash sum in context against the value of all the benefits being given up to enable Ms S to make an informed decision. For the reasons explained by the investigator, I’m not persuaded the firm did that and fulfilled its regulatory obligations. Taking all the above into account, I don’t think JLT acted in Ms S’ best interests. The cash sum was relatively modest, and Ms S didn’t urgently need it, and it wasn’t used for essential purposes. For the reasons outlined by the investigator, I don’t think Ms S would likely have transferred out of the OPS if JLT had acted in her best interests and provided sufficient information and explanation to enable Ms S to weigh up all the pros and cons and make a fully informed decision. Accordingly, I’m persuaded that Ms S’ complaint should succeed. Putting things right A fair and reasonable outcome would be for JLT Wealth Management Limited to put Ms S as far as possible into the position she would now be in had JLT acted in her best interests. I consider that Ms S would have likely remained in the occupational scheme. JLT 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. For clarity, Ms S has not yet retired, and she has no plans to do so at present. So,

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compensation should be based on the scheme’s normal retirement age of 65 as per the usual assumptions in the FCA's guidance. 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 Ms S’ acceptance. If the redress calculation demonstrates a loss, as explained in PS22/13 and set out in DISP App 4, JLT Wealth Management Limited should: • calculate and offer Ms S redress as a cash lump sum payment, • explain to Ms S 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 Ms S receives could be used to augment the pension rather than receiving it all as a cash lump sum, • if Ms S accepts JLT’s offer to calculate how much of the redress could be augmented, request the necessary information and not charge Ms S for the calculation, even if she 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 Ms S’ end of year tax position. Redress paid directly to Ms S 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), JLT may make a notional deduction to allow for income tax that would otherwise have been paid. Ms 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. My final decision My final decision is that I uphold Ms S’ complaint. I order JLT Wealth Management Limited to calculate and pay any compensation due to Ms S in line with the methodology set out under ‘Putting things right’ above. Under the rules of the Financial Ombudsman Service, I’m required to ask Ms S to accept or reject my decision before 5 September 2025. David Ashley Ombudsman

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