London & Colonial Services Limited · DRN-5593307

The complaint Mrs M has a self-invested personal pension (SIPP) with London & Colonial Services Limited (“L&C”) now Pathlines Pensions UK Limited, but I will refer to L&C throughout. Mrs M says L&C mismanaged her SIPP and as a result it allowed investments to be made that were not appropriate investments for her pension, which has caused her significant losses. What happened This complaint is one of approximately 20 similar complaints. I will refer to them as the MA complaints. They relate to events in the period from late 2014 and into 2016. Those complaints have much in common but aren’t identical and involve the following: • The complainant: in this case Mrs M. • The respondent firm (the business the complaint is about): L&C, the SIPP operator in the MA complaints. • Third parties: not all third parties I mention below are involved in every MA case, but every MA case involves three or more of those third parties. The third parties in the MA complaint form into two groups: advisers and introducers; and platform providers and investment managers. The advisers and introducers: The advisers and introducers were: • A firm I will call MA. This is a regulated advice firm authorised to advise on pension transfers. • A man I will call Mr M, an adviser with, and director of MA until late 2016. • A firm I will call FW, an appointed representative of a regulated firm I will call PF. FW was not authorised to advise on pension transfers. • A man I will call Mr Y, an adviser at firm FW. • A man I will call Mr B, an unregulated introducer who introduced business to both firm MA and firm FW. There is no dispute that MA and Mr M were involved in all the MA cases. The MA complainants all say that Mr B was also involved in all the cases. MA has said that FW or Mr B obtained leads from the Pensions Wise/Money Advice website and that all or most of the MA complainants first contacted FW or Mr B through that route and were then introduced to MA by Mr B. The platform providers and/or investment managers: Platform arrangements were opened for all the MA complainants. Investments on the platforms may be chosen by the member without assistance from anyone else. This type of investing, where the consumer gives the instruction without advice

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is called ‘execution only’. In practice advisers or investment managers are usually involved. An investment manager may act on an advisory basis – where the investment manager gives advice, and the client makes the decision whether to buy, or sell an investment. Or a consumer may authorise the investment manager to buy, sell or hold investments at their discretion. The latter is called discretionary investment management and is also often referred to as discretionary fund management or DFM with the investment manager referred to as a DFM. The MA complainants all invested in or through one or more of the following third-party platform providers and investment managers: • Shard Capital: provided a platform used to hold investments involving another firm called Horizon Stockbroking. Shard Capital is still trading, and I am not aware of any complaints against that firm. • Horizon Stockbroking: in some of the MA complaints Horizon Stockbroking acted as an investment manager and operated using the account/platform with Shard Capital. Horizon acted as DFM in some of the MA complaints. In all or most of the MA complaints in which Horizon is involved it carried out Contracts for Difference (CFD) trading on a discretionary basis. Such trading has often resulted in losses to relevant MA complainants. Horizon Stockbroking is no longer trading. • Strand Capital: features in most of the MA complaints. Strand Capital was a platform provider and investment manager. At the time covered by the MA complaints Strand Capital was owned by Optima Worldwide Group (“OWG”) and most of the MA complainants invested in bonds issued by OWG. All or most of those purchases involved letters that purported to be from the MA complainant instructing Strand Capital to buy the OWG Bonds on an execution only basis. Strand Capital is no longer trading. Nor is OWG. The money invested in the OWG Bonds has been lost causing losses to relevant MA complainants. • Beaufort Securities: features in most of the MA complaints. Beaufort Securities was an investment firm that was a platform provider and an investment manager. In some MA cases money paid over to Beaufort Securities was redirected to investment with Strand. In some cases, money was invested with Beaufort Securities in investments which later failed causing losses to relevant MA complainants. Beaufort Securities is no longer trading. An unusual feature of the MA complaints is that initially MA acted for the consumers in complaints against L&C and against relevant third parties. That arrangement has now stopped and most if not all the MA complainants have made complaints to MA and recovered compensation from it. In many cases compensation has also been recovered either from a relevant third party or from the Financial Services Compensation Scheme (“FSCS”) after the relevant (regulated) third party has gone into default. Those consumers who still have unrecovered losses are proceeding with their complaints against L&C. What happened in Mrs M’s case: In 2015, Mrs M was a member of a defined benefit occupational pension schemes (“OPS”). She was interested in accessing her pension to retire immediately taking the maximum tax- free cash (“TFC”) to help her repay her mortgage and buy a property abroad. And Mrs M has also told us she was interested in transferred to ensure he pensions benefits went to her family when she passed away. Mrs M has said she was introduced by Mr B to Mr M of firm MA. In April 2016, MA advised Mrs M to transfer her pension to a L&C SIPP and to invest her pensions monies with Beaufort Securities on a DFM basis.

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Mrs M accepted MA’s recommendation and applied for a “Simple Investment SIPP” with L&C on a paper version of the application form, that she signed on 19 April 2016. This application form recorded: • Mrs M’s “adviser” was Mr M of MA. • The adviser ticked the box on the application form to confirm the following statement: “Advice given at point of sale to client that takes account of the intended underlying investment strategy and the advice has been followed.” • The “Investment Manager/DFM” was to be Mr S of Beaufort Securities. • Investment decisions and “trading for your chosen investment partner” was to be the “Investment Manager /DFM”. Although L&C doesn’t appear to have provided a copy of the application itself, I can see from emails between L&C and Beaufort on 10 May 2016 that Mrs M also signed an application for a share dealing account with Beaufort Securities around that time. And L&C confirmed in the same email that this was for a discretionary service with Beaufort. In mid-May 2016, almost £556,000 was transferred into Mrs M’s L&C SIPP from her OPS. Soon after she took TFC of just over £55,000. And, on 26 May 2016, L&C sent approximately £489,000 to Beaufort Securities for Mrs M’s account. And a number of investments were subsequently made via Mrs M’s Beaufort account. On 1 September 2016 just under £49,000 was moved back from Mrs M’s Beaufort account to her L&C SIPP bank account upon request, on the basis MA felt that 10% should be kept in cash for fees and seemingly as Mrs M’s SIPP bank account had a zero balance at the time. On 25 January 2017, L&C wrote to Mrs M to say that Beaufort was ceasing its DFM business because of concerns identified by the FCA. It set out Mrs M’s options, including doing nothing, where possible selling her investments or transferring her holdings to another provider. Seemingly as a result, on 7 February 2017, just under £252,000 from some of Mrs M’s holdings with Beaufort was disinvested and the monies returned to her L&C SIPP. And, in April 2017, £259,000 of Mrs M’s SIPP pension monies was invested with another platform provider – then named Cofunds. From February 2018, Mrs M started to take income payments from her SIPP. And she later went on to take further TFC payments totalling around £74,000. Beaufort Securities seems to have had some issues in 2016, but the details were not made public. Beaufort Securities later got into difficulties which became a matter of public knowledge in 2018 and it went into special administration in March 2018. I understand that several Mrs M’s Beaufort investments got into difficulty. For example, European Investment Properties Plc, Blueprint Industrial Engineering Plc and All Saints Commercial Plc are illiquid. And Ecovista Plc, Hydrology PLC and the Yumchaa investments are either wound up or de-listed. Mrs M has therefore been caused significant losses to her pension. Initially, in 2017/2018 MA represented Mrs M in making complaints and/or claims against L&C and Beaufort Securities.

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Mrs M made a claim with the FSCS in respect of Beaufort. And, in November 2019, the FSCS reviewed Mr E’s claim and paid her £50,000 in total (after having paid her an interim payment) which, as I understand it, was its compensation limit then. And, on request, the FSCS later reassigned legal rights back to Mrs M. MA made a complaint to L&C on Mrs M’s behalf in July 2018 and referred that complaint to our Service in October/November 2018. MA submitted a number of other complaints to L&C for other clients at that time. MA stopped acting for Mrs M in this complaint in June 2021. Mrs M considers that L&C were at fault in the management of her SIPP in a number of ways, such as: • It failed to identify or track the underlying investments being made with Beaufort. • A number of the investments made, including in Mrs M’s case, weren’t investments that were permitted by L&C. And, despite having produced a list of permitted investments, L&C had no mechanism by which to review compliance with the list in order to protect clients interests. • While clients were advised on the transfer and SIPP provider, no advice was given by the regulated adviser on the underlying investments. • L&C didn’t carry out sufficient due diligence on third parties, nor on the type of investments being made by clients. Mrs M also made a complaint to MA and it offered to partially settle Mrs M’s complaint in late 2022. It said that while it calculated Mrs M’s loss to be over £265,000, it would only pay her £150,000, which Mrs M has said she accepted and was paid. Mrs M proceeded with her complaint against L&C. L&C considers that it isn’t at fault and so it did not uphold Mrs M ’s complaint. One of our Investigators considered Mrs M’s complaint and thought it should be upheld. She said L&C should have had concerns about the business introduced by MA and the investments arranged by Beaufort. She thought L&C didn’t carry out adequate due diligence checks either before or during L&C’s dealings with those businesses. And she said it was fair and reasonable for L&C to pay compensation to Mrs M in respect of the losses suffered. The Investigator explained in detail how she thought L&C should put things right. L&C didn’t agree. And while it didn’t make specific submissions in respect of Mrs M’s complaint, despite requesting an extension to reply, I’m aware from other complaints that it made a number of points in respect of our Service’s position. I have considered all the points made. I set out below what I consider the be the main points relevant to determining this complaint. • L&C’s role is limited. It is the Trustee and administrator of the SIPP. It does not provide advice. It is for the member to choose their own investments. • L&C does not comment on the merits of any investment chosen by the member or their adviser or investment manager. • LC’s only role in this area is to check the investment is of a type permitted within the rules of the SIPP and HMRC’s rules. • MA, Beaufort Securities and Strand Capital were all regulated businesses, and it was reasonable for L&C to rely on them. • L&G did have a permitted list of investments. But it wasn’t privvy to the investment

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purchases before the events – the investments were made without L&C’s knowledge or approval. And, while Beaufort has acted outside its permitted list, responsibility lies with MA and Beaufort, as the businesses it deals with are required to agree to invest only in permitted investments. • L&C had such agreements with both Beaufort Securities and Strand Capital. • L&C is not required to perform ongoing checks on discretionary investment managers. Their status as regulated firms may reasonably be relied upon. • Beaufort and/or MA is responsible for Mrs M’s losses, not L&C. • The Investigator has relied on irrelevant guidance and has not taken into account key elements of the relevant case law. The investigator is seeking to extend L&C’s duties beyond what a SIPP provider is required to do and in inconsistent with the case law authority of Adams v Options. • The non-advisory relationship between Mrs M and L&C was made clear and this is the correct starting point. Clear warnings were given. • The Investigator’s view is inconsistent with decisions made by an Ombudsman relating to the MA. The Ombudsman said MA was 100% responsible in other cases involving the third parties. • There is an ongoing dispute between the MA and L&C. • There is also a court claim(s) brought by a client(s) of MA against both MA and L&C. • If compensation is due it should not be calculated based on guidance applicable to pension transfer advice and L&C did not advise on the pension transfer. As both parties did not agree with the Investigator, this complaint has been referred to me to determine. I issued a provisional decision upholding Mrs M’s complaint, but for expanded reasons and with amended redress to that set out by our Investigator. While Mrs M replied accepting my provisional decision with no further comments to add, L&C didn’t reply. What I’ve decided – and why I’ve considered all the available evidence and arguments to decide what’s fair and reasonable in the circumstances of this complaint. I’ve considered all the points made by the parties. I have not however responded to all of them below; I have concentrated on what I consider to be the main issues. And, having done so, I’m upholding Mrs M’s complaint for largely the same reasons as those given in my provisional decision, which are set out again below. I’m required to determine this complaint by reference to what I consider to be fair and reasonable in all the circumstances of the case. When considering what is fair and reasonable in the circumstances, I need to take account of relevant law and regulations, regulator’s rules, guidance and standards, codes of practice and, where appropriate, what I consider to have been good industry practice at the relevant time. I have taken into account a number of considerations including, but not limited to: • The agreement between the parties. • The Financial Services and Markets Act 2000 (“FSMA”). • Court decisions relating to SIPP operators, in particular Options UK Personal Pensions LLP v Financial Ombudsman Service Limited [2024] EWCA Civ 541

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(“Options”) and the case law referred to in it including: o Adams v Options UK Personal Pensions LLP [2021] EWCA Civ 474 (“Adams”) o R (Berkeley Burke SIPP Administration) v Financial Ombudsman Service [2018] EWHC 2878 (“Berkeley Burke”) o Adams v Options SIPP UK LLP [2020] EWHC 1229 (Ch) (“Adams – High Court”) • The Financial Services Authority (FSA) and Financial Conduct Authority (FCA) rules including the following: o PRIN Principles for Business o COBS Conduct of Business Sourcebook o DISP Dispute Resolution Complaints • Various regulatory publications relating to, or relevant to, SIPP operators and good industry practice. The legal background: As highlighted in the High Court decision in Adams the factual context is the starting point for considering the obligations the parties were under. And in this case the contractual relationship between L&C and Mrs M is a non-advisory, or execution only, relationship. Setting up and operating a SIPP is an activity that is regulated under FSMA. And pensions are subject to HMRC rules. L&C was therefore subject to various obligations when offering and providing the service it agreed to provide – which in this case was a non-advisory service. I have considered the obligations on L&C within the context of the non-advisory relationship agreed between the parties. The case law: I’m required to determine this complaint by reference to what is in my opinion fair and reasonable in all the circumstances. I am not required to determine the complaint in the same way as a court. A court considers a claim as defined in the formal pleadings and they will be based on legal causes of action. Our Service was set up with a wider scope which means complaints might be upheld, and compensation awarded, in circumstances where a court would not do the same. The approach taken by our Service in two similar complaints was challenged in judicial review proceedings in the Berkeley Burke and the Options cases. In both cases the approach taken by the ombudsman concerned was endorsed by the court. A number of different arguments have therefore been considered by the courts and may now reasonably be regarded as resolved. It is not necessary for me to quote extensively from the various court decisions. The Principles for Businesses: The Principles for Businesses (“the Principles”), which are set out in the FCA’s Handbook “are a general statement of the fundamental obligations of firms under the regulatory system” (see PRIN 1.1.2G). The Principles apply even when the regulated firm provides its services on a non-advisory basis, in a way appropriate to that relationship. Principles 2, 3 and 6 are of particular relevance here. They provide:

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“Principle 2 – Skill, care and diligence – A firm must conduct its business with due skill, care and diligence. Principle 3 – Management and control – A firm must take reasonable care to organise and control its affairs responsibly and effectively, with adequate risk management systems. Principle 6 – Customers’ interests – A firm must pay due regard to the interests of its customers and treat them fairly.” I am satisfied that I am required to take the Principles into account (see Berkley Burke) even though a breach of the Principles does not give rise to a claim for damages at law (see Options). The regulatory publications and good industry practice: The regulator issued a number of publications which reminded SIPP operators of their obligations, and which set out how they might achieve the outcomes envisaged by the Principles, namely: • The 2009 and 2012 Thematic Review Reports. • The October 2013 finalised SIPP operator guidance. • The July 2014 “Dear CEO” letter. The 2009 Report included: “We are concerned by a relatively widespread misunderstanding among SIPP operators that they bear little or no responsibility for the quality of the SIPP business that they administer, because advice is the responsibility of other parties, for example Independent Financial Advisers… We are very clear that SIPP operators, regardless of whether they provide advice, are bound by Principle 6 of the Principles for Businesses (‘a firm must pay due regard to the interests of its clients and treat them fairly’) insofar as they are obliged to ensure the fair treatment of their customers.” The Report also included: “The following are examples of measures that SIPP operators could consider, taken from examples of good practice that we observed and suggestions we have made to firms: • Confirming, both initially and on an ongoing basis, that intermediaries that advise clients are authorised and regulated by the FSA, that they have the appropriate permissions to give the advice they are providing to the firm’s clients, and that they do not appear on the FSA website listing warning notices. • Having Terms of Business agreements governing relationships, and clarifying respective responsibilities, with intermediaries introducing SIPP business. • Routinely recording and reviewing the type (i.e. the nature of the SIPP investment) and size of investments recommended by intermediaries that give advice and introduce clients to the firm, so that potentially unsuitable SIPPs can be identified. • Being able to identify anomalous investments, e.g. unusually small or large transactions or more ‘esoteric’ investments such as

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unquoted shares, together with the intermediary that introduced the business. This would enable the firm to seek appropriate clarification, e.g. from the client or their adviser, if it is concerned about the suitability of what was recommended. • Requesting copies of the suitability reports provided to clients by the intermediary giving advice. While SIPP operators are not responsible for advice, having this information would enhance the firm’s understanding of its clients, making the facilitation of unsuitable SIPPs less likely. • Routinely identifying instances of execution-only clients who have signed disclaimers taking responsibility for their investment decisions, and gathering and analysing data regarding the aggregate volume of such business. • Identifying instances of clients waiving their cancellation rights, and the reasons for this.” The October 2013 finalised guidance for SIPP operators included the following: “Relationships between firms that advise and introduce prospective members and SIPP operators Examples of good practice we observed during our work with SIPP operators include the following: • Confirming, both initially and on an ongoing basis, that: introducers that advise clients are authorised and regulated by the FCA; that they have the appropriate permissions to give the advice they are providing; neither the firm, nor its approved persons are on the list of prohibited individuals or cancelled firms and have a clear disciplinary history; and that the firm does not appear on the FCA website listings for un-authorised business warnings. • Having terms of business agreements that govern relationships and clarify the responsibilities of those introducers providing SIPP business to a firm. • Understanding the nature of the introducers’ work to establish the nature of the firm, what their business objectives are, the types of clients they deal with, the levels of business they conduct and expect to introduce, the types of investments they recommend and whether they use other SIPP operators. Being satisfied that they are appropriate to deal with. • Being able to identify irregular investments, often indicated by unusually small or large transactions; or higher risk investments such as unquoted shares which may be illiquid. This would enable the firm to seek appropriate clarification, for example from the prospective member or their adviser, if it has any concerns. • Identifying instances when prospective members waive their cancellation rights and the reasons for this. Although the members’ advisers are responsible for the SIPP investment advice given, as a SIPP operator the firm has a responsibility for the quality of the SIPP business it administers. Examples of good practice we have identified include: • conducting independent verification checks on members to ensure the information they are being supplied with, or that they are providing the firm with, is authentic and meets the firm’s procedures and are not being used to launder money • having clear terms of business agreements in place which govern

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relationships and clarify responsibilities for relationships with other professional bodies such as solicitors and accountants, and • using non-regulated introducer checklists which demonstrate the SIPP operators have considered the additional risks involved in accepting business from non-regulated introducers.” Although I have not quoted all the above-mentioned publications, I have considered them all in their entirety. The 2009 and 2012 Thematic Review Reports and the “Dear CEO” letter are not formal guidance (whereas the 2013 finalised guidance is). However all of the publications provide a reminder that the Principles for Businesses apply and are an indication of the kinds of things a SIPP operator might do to ensure it is treating its customers fairly and produce the outcomes envisaged by the Principles. In that respect, the publications which set out the regulators’ expectations of what SIPP operators should be doing also go some way to indicate what I consider amounts to good industry practice, and I’m therefore satisfied it’s appropriate to take them into account (as did the ombudsmen whose decisions were upheld by the courts in the Berkeley Burke and Options cases). Points to note about the SIPP publications include: • The Principles on which the comments made in the publications are based have existed throughout the period covered by this complaint. • The comments made in the publications apply to SIPP operators that provide a non- advisory service. • Neither court in the Adams case considered the publications in the context of deciding what was fair and reasonable in all the circumstances. As already mentioned, the court has a different approach and was deciding different issues. • What should be done by the SIPP operator to meet the regulatory obligations on it will always depend upon the circumstances. COBS 19.1.6G: At the time the MA complainants applied for their SIPPs with L&C guidance to advisers within the COBS rules said: “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.” Although this guidance was aimed at advisers, L&C would (or should) have been aware of it. L&C would (or should) accordingly have been aware that the starting presumption in any pension transfer case is that the transfer is unsuitable. This did not necessarily mean that L&C was required to reject all applications involving pension transfers or to audit the advice in any pension transfer application received. It did however mean that L&C was aware (or should have been aware) for the need for caution with pension transfers as a general point. FSA & FCA Alerts relating to pension transfer advice: In January 2013 the FSA issued an alert that reminded advisers that the advice on a pension transfer must take account of the overall investment proposition – the SIPP and the expected underlying investments - the customer is contemplating.

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“Advising on pension transfers with a view to investing pension monies into unregulated products through a SIPP 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 which may be in Unregulated Collective Investment Schemes). Examples of these unregulated investments are diamonds, overseas property developments, store pods, forestry and film schemes, among other non-mainstream propositions. The cases we have seen tend to operate under a similar advice model. An introducer will pass customer details to an unregulated firm, which markets an unregulated investment (e.g. an overseas property development). When the customer expresses an interest in the unregulated investment, the customer is introduced to a regulated financial adviser to provide advice on a SIPP capable of holding the unregulated investment. The financial adviser does not give advice on the unregulated investment, and says it is only providing advice on a SIPP capable of holding the unregulated investment. Sometimes the regulated financial adviser also assists the customer to unlock monies held in other investments (e.g. other pension arrangements) so that the customer is able to invest in the unregulated investment. … Financial advisers using this advice model are under the mistaken impression that this process means they do not have to consider the unregulated investment as part of their advice to invest in the SIPP and that they only need to consider the suitability of the SIPP in the abstract. This is incorrect. 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.” In April 2014 the FCA issued a further Alert to advice firms. It also stated that the suitability of the underlying investment must be part of the advice given to the customer. “Why are we issuing this alert? On 18 January 2013, we outlined our concerns that firms were advising on pension transfers or switches to SIPPs without assessing the advantages and disadvantages for customers of the underlying investments to be held within the new pension arrangement. Following the initial alert, we carried out further supervisory work, including visiting some firms, to assess whether their business model complied with our requirements. Through this work, we continued to identify serious and ongoing failings.

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We have taken action to stop a large number of firms from operating such business models and will continue to do so. We have also recently published two final notices where we took enforcement action against two partners in [1 Stop Financial Services] who failed to comply with our rules in this area. Our view Customers have a right to expect an authorised firm to act in their best interests, yet the serious and ongoing failings found at firms have placed a substantial number of customers’ retirement savings at risk. We believe pension transfers or switches to SIPPs intended to hold non-mainstream propositions are unlikely to be suitable options for the vast majority of retail customers. Firms operating in this market need to be particularly careful to ensure their advice is suitable. What does this mean for firms? 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 for the customer, 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 or switch at all as it will not be able to assess suitability of the transaction as a whole. The failings outlined in this alert are unacceptable and amount to conduct that falls well short of firms’ obligations under our Principles for Businesses and Conduct of Business rules. In particular, we are reminding firms that they must conduct their business with integrity (Principle 1), due skill, care and diligence (Principle 2) and must pay due regard to the interests of their customers and treat them fairly (Principle 6).” These Alerts were addressed to advisers not SIPP operators, but they were matters SIPP operators would reasonably have been aware of at the time of the MA complainants’ applications. Final Notice of decision relating to the managing director of Montpelier Pension Administration Services Limited (“MPAS”) On 18 April 2013 the FCA issued a decision banning the former managing director of a SIPP provider referred to as MPAS in the Final Decision notice. That decision included: Due diligence and monitoring of discretionary fund managers 4.38. A proportion of the assets administered by MPAS were managed by discretionary fund managers during the Relevant Period, and MPAS typically entered into agreements with those discretionary fund managers upon recommendation by MPAS’ Introducers. However, no due diligence was undertaken in relation to the recommended fund managers, nor was any ongoing monitoring undertaken to ensure that those with responsibility for management of members’ assets were doing so properly… And

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Due diligence and monitoring of discretionary fund managers 5.22. Mr [W] failed to ensure that any controls were in place in relation to discretionary fund managers, in the form of agreements setting out the terms on which SIPP assets were to be managed. By failing in this regard, Mr [W] exposed members to the risk that their assets would be mismanaged without detection by MPAS, and especially given that no other procedures were in place for continuous monitoring of discretionary fund managers. The information above was of direct relevance to SIPP operators and L&C should have been aware of it at the time of the MA complainants SIPP applications. It was a further reminder of the kinds of things a SIPP operator might do to ensure it is treating its customers fairly and produce the outcomes envisaged by the Principles. FCA Handbook Notice No.28 In 2012 and 2014 the FCA consulted on rules amending the capital requirements for SIPP operators. The rules required firms to calculate assets under management with an additional capital requirement for non-standard assets. In June 2015 the FCA consulted on additional guidance on the rules in Quarterly Consultation Paper 15/19 and it gave feedback on that consultation in Handbook Notice No.28 in December 2015. An asset could be considered a standard asset if included the FCA’s list of standard assets (the first condition) and if capable of being accurately and fairly valued on an ongoing basis and readily realised within 30 days whenever required (the second condition). The FCA gave the following guidance on how a discretionary managed (DFM) portfolio should be treated as regards categorisation as either a standard or non-standard assets: “3.24 Provided the second condition is met, a DFM portfolio can be standard when the SIPP operator has arrangements in place to ensure that the portfolio comprises standard assets only. These arrangements may vary across different firms and business models, and therefore we cannot prescribe any regulatory preference: it should be the choice and responsibility of the firm.” [Emphasis added] Although the above was published before Mrs M’s SIPP application, it postdates the MA’s application to L&C to become an introducer in 2014. And it does not relate to due diligence processes as such. But a point to note is the reference to arrangements “to ensure” portfolios comprise standard asset only not to arrangements (for example) requiring that portfolios comprise standard assets only. This makes sense as the point being made by the FCA is about outcome rather than process. I consider the above supports the view that for SIPP operators who permitted DFM arrangements in their SIPPs it was good practice to have arrangements for monitoring the DFMs to reasonably ensure that portfolios comprised only assets that were acceptable to the SIPP operator. What did L&C’s obligations mean in practice? I am satisfied that to meet its regulatory obligations when conducting its operation of SIPPs business, L&C had to decide whether to accept or reject particular investments and/or referrals of business with the Principles in mind. I say this based on the overarching nature of the Principles (as is clear from the case law) and based on good industry practice notwithstanding the comments in the Adams case in the High Court relating to COBS 2.1.1R

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I am satisfied that a non-advisory SIPP operator could decide not to accept a referral of business or a request to make an investment without giving advice. And I am satisfied that in practice many non-advisory SIPP operators did refuse to accept business and/or refuse to make investments without giving advice. It is my view that a non-advisory SIPP operator should have due diligence processes in place to check those who introduce business to them, and to check the investments they are asked to make on behalf of members or potential members. And L&C should have used the knowledge it gained from its due diligence checks to decide whether to accept or reject a referral of business or a particular investment. I am also satisfied, based on the Principles and good industry practice, that SIPP operators should understand the nature of the investments made for their members when the investments are made via a platform and/or DFM and that good industry practice included: • processes or procedures such as permitted investment lists • arrangements in place with platform providers and DFMs to require them to make only permitted investments • processes to ensure compliance with those arrangements. L&C’s position in broad terms: In broad terms L&C’s position is: • Its due diligence processes (which included checks on MA, Strand Capital and Beaufort Securities, and a permitted investment list system) were carried out and were appropriate for its role as non-advisory SIPP operator. • Its due diligence processes did not reveal any cause for concern at the time. It was not aware of the involvement of the unregulated introducer Mr B. • It was not reasonably required to do more, but any further checks would not have revealed anything untoward. • In any event, AM is solely and wholly responsible for the losses Mrs M has suffered. It is unfair to require L&C to compensate Mrs M for the loss others have caused her. A further look at the parties involved in the MA cases: Firm MA: In all the MA complaints MA advised the consumers to transfer or switch existing pensions to a SIPP with L&C. MA applied to L&C to act as an intermediary to introduce business (SIPP applications) to L&C in December 2014. L&C dealt with Mr M of MA. Around 30 clients were introduced to L&C by MA between December 2014 and November 2016. Of those applications 16 involved a defined benefit transfer. Across those 31 members there were 80 transfers including 24 from defined benefit transfers and 56 pension switches from defined contribution pensions. In the 2014/2015 period MA operated an approach in which it would categorise clients as transaction clients, in which it would only advise about the potential transfer of pensions to a new pension provider. MA has said the client would then be “mandated” back to the introducing adviser who would be responsible for recommending suitable investments for the client.

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I understand from of the earlier cases applicants referred to L&C by MA the consumer was categorised by MA as a transaction client. MA says this model was also used in other cases with applications in late 2014 which must have been some of the first, if not the first, applications L&C received from MA. MA has said with transaction clients it provided an indication of the portfolio it would have recommended to a client with his or her risk profile. In the early case MA set out what it said was a model asset allocation for an investor with a medium risk profile. MA appears to have considered that this meant it could answer yes to the following question on the L&C SIPP application form: “Advice given at point of sale to client that takes account of the intended underlying investment strategy:” MA acted for the MA complainants when they first complained to L&C and to other third parties and/or made claims to the FSCS. L&C and others were concerned about a conflict of interest between MA and the consumers and MA stopped acting for the complainants. Complaints were also made against MA by a number of, if not all of, the MA complainants. Some of those complaints were referred to our Service. Some MA complainants may have issued court proceedings against MA. As I understand it, all those disputes between consumers and MA have been concluded one way or another and compensation paid by MA to all or most of the MA complainants. The amounts paid did not however cover the consumers’ full losses. As I understand it, MA and L&C are in litigation in relation to the complaints made to it by MA complainants. That is a matter L&C has drawn to my attention, but I do not consider it relevant to the resolution of this complaint. Firm FW FW is another advice firm based in the same city as MA. According to the FCA register this firm involved one approved person, Mr Y. Mr Y/FW was an appointed representative of PF between 2014 and 2018. According to MA, Mr Y or his firm (or the introducer to FW, Mr B) bought leads from the Pensions Wise/Money Advice website. Neither FW nor Mr Y were authorised to advise on pension transfers, but Mr Y could advise on pension matters that did not involve transfers from occupational pensions. According to MA, Mr Y shared an office with Mr B. L&C have not been asked about its previous dealings with firm FW during the investigation of the MA complaints. But in the MA complaints L&C has referred to previous Financial Ombudsman Service published decisions. I have looked in the data base of published decisions and have seen a complaint against PF in relation to FW. I note that according to the published decision that case involved a consumer who took out a SIPP with L&C in December 2014 who went on to invest in OWG Bonds and in an investment portfolio with

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Horizon Stockbroking through Shard Capital in January 2015. That case also involved Mr B and I note PF argued that FW was asked to give advice restricted to the switch of an existing pension to a SIPP and FW advised on that point only and not on the investments made in the SIPP. The consumer in that case said the FW adviser and Mr B recommended the OWG Bonds to him. Although PF argued that FW did not recommend the investments, the alleged involvement of Mr B and the investments made are points of similarity with the MA complaints. I am aware from seeing other complaints that Mr Y/FW had operated a restricted advice methodology under which FW advised on pension switches into SIPPs without giving advice on the suitability of the investments to be made in the SIPP after the switch. And that PF took action to stop that practice from August 2015. The steps it took included requiring FW to give advice that was not constrained by the client’s objectives as agreed with an introducer, and restricting recommendations of SIPP operators and DFMs to those on PF’s approved panel. August 2015 is after MA approached L&C about introducing new business to L&C, and after the application in the earlier MA case I mentioned above. As noted above at the time of the application in the earlier MA case the proposal, as recorded in the MA recommendation report to that consumer, was that he (that consumer) would be mandated back to FW for investment advice after his pensions had been switched to L&C. And, at that time, it does seem that FW was operating in a way in which its clients have made investments of the same type as those made by the MA complainants - investments in which Mr B appears to have an interest, a point I will return to below. Horizon Stockbroking: In some of the MA complaints Horizon Stockbroking acted as an investment manager and, as I understand it, operated using an account or platform with Shard Capital. Horizon Stockbroking acted as DFM in some of the MA complaints. And in some or all of those cases the DFM engaged in CFD trading. CFD trading is a particularly high-risk form of investing. CFDs were expressly referred to as not permitted on the L&C permitted investment list in 2015. However at around the time the MA application to be an L&C introducer was first being discussed L&C and Horizon reached an agreement under which L&C would permit CFD investment in limited circumstances. In February 2018 L&C said the following in an email to MA when it was investigating matters surrounding what became the MA complaints: “In respect of the matter relating to the allowance of CFDs. The London & Colonial investment committee met in December 14 and January 15 to discuss and exception to the agreed permitted investment lists in potentially allowing CFD’s. The committee agreed that where the client had ticked they wished to invest in CFD and has appointed Horizon as the discretionary fund manager an exception would be allowed outside the normal permitted list. Horizon would undertake the suitability of such investment in line with their risk profiling and discussions with the client and make the client aware of such risks. The criteria set by L&C to allow CFD was 1. Client introduced by an adviser firm who is using a DFM

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2. 20% in CFD 3. Client has appointed Horizon as the DFM 4. The DFM has undertaken risk appetite with the client and determined that the CFD were suitable for the client. 5. The DFM would have a stop loss in place.” Horizon Stockbroking is no longer trading. The FCA withdrew its authorisation in November 2019. And the FSCS has declared the firm in default and is dealing with claims made about that firm. Mr B appears to have had some form of relationship with Horizon Stockbroking. I have seen a Horizon Stockbroking business card on which Mr B is referred to as “Associate”. According to the FCA register Mr B was not an approved person or authorised to advise or trade on behalf of that firm. And as I understand it Horizon denied that Mr B acted for it in any capacity. Strand Capital: Strand Capital was authorised by the FSA from 2009 and by the FCA from 2013 until 2023. Strand Capital was an investment firm that was an investment manager and platform provider. L&C says in around September 2014 it entered an agreement with Strand. L&C has not been able to locate the original agreement from that time but has provided a copy of the final draft agreement (which relates to something called the Sunlight Account). In 2015 Strand Capital was listed as one of the 19 panel platform providers for its Mult-Platform SIPP. Most if not all the MA complainants had accounts with Strand Capital. In 2017 Strand Capital entered administration. A report from the administrator included the following: “In January 2014 the Company was acquired … by Panacea Corporate Services Limited, and was subsequently transferred to Optima Worldwide Group Plc (“OWG”). … OWG invested funds into the Company to support the development of an algorithmic trading platform. …Until May 2016 the only investments arranged by the Company were in OWG bonds. However, investments in OWG bonds slowed thereafter as alternative investment products were introduced by the Company.” L&C has said that it did carry out checks with Strand which included details of its typical portfolios and it provided a copy of a document headed Strand Capital Limited Due Diligence Pack from Strand Capital dated 1 April 2016. That document is eight pages long and appears to have been prepared by Strand itself. It makes a number of fairly generalised claims about Strand Capital’s approach. It gives the impression it has model portfolios selected from regulated funds with low fees selected on the basis of sophisticated techniques but does not make any specific verifiable points about its model portfolios or any investments made. The document does give an impression that is different to the point later made by the Administrator that Strand only invested in OWG Bonds until May 2016.

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The due diligence document does disclose that Strand is a subsidiary of OWG and that it may place a proportion of a client’s portfolio in OWG Bonds. Optima Worldwide Group: As mentioned above OWG was the parent company of Strand Capital during the period the MA complainants opened their SIPPs with L&C. All or most of the MA complainants invested in OWG Bonds in the L&C SIPPs. OWG was also an investment provider. It issued bond investments – the OWG Bonds. As I understand it there were four versions of OWG Bonds generally referred to as series A, B, C and D. Series A and B Bonds were unlisted. According to an OWG document for the Series D Bonds dated 31 August 2016, the Series C Bonds were listed on the CXG Markets exchange (in Denmark) until that market closed. As I understand it the Series C Bond Instrument was dated 18 November 2014. I do not know when the Series C Bond was first listed but the CXG market closed in July 2015. In September 2015 OWG applied for the Series C Bonds to be listed on the First North Bond Market operated by the NASDAQ/OMX Group in Denmark. Both exchanges were relatively lightly regulated and intended for newer, and therefore generally smaller, companies who wanted to raise capital. The Series C Bond was closed to new investors on 23 October 2015. The Series D Bond was launched in August 2016 and expected to be listed in September 2016. OWG went into liquidation in January 2021. Many of the MA complainants invested in OWG Bonds as a result of instructions contained in letters that purport to come from them giving instructions to Strand Capital to invest in the Bonds. Those letters have a number of similarities such as: • The same font type and size. • The frequent marking of the letters as private and confidential with that heading in bold and underlined. • The addressing of the letter to Dear Sirs but signing off yours sincerely rather than yours faithfully. • The use of capitals for each word in Self Invested Personal Pension and when writing numbers in words rather than figures, but not using capitals for the first words in the phrase execution only. • Writing Self Invested Personal Pension in full followed by SIPP in brackets but then not using that abbreviation later in the letter. • The use of the unusual closing “I hope this meets with your approval”. • The use of a capital letter S in yours sincerely. The number of such similarities and therefore the strong likelihood they were all produced by one author rather than by each MA complainant is therefore to be noted.

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Beaufort Securities: This firm was formerly known as Hoodless Brennan & Partners Plc. In 2000 the FSA fined that firm. It found that the firm had acted with a lack of integrity in relation to a share placing. In 2003 the then CEO of Hoodless Brennan had his approval to perform controlled functions withdrawn after the regulator decided he was not a fit and proper person to perform a controlled function. The Chairman of Hoodless Brennan was also found to have made misjudgements but his approval was not withdrawn. In 2006 Hoodless Brennan was fined again by the regulator. The FSA said there were weaknesses in its selling practices relating to the sale of AIM stock to advisory customers who might not understand the risks involved in investing in smaller companies. It is fair to say that a number of other small stockbroking firms were also fined for poor selling practices at around that time. And it should be noted that despite the above matters Hoodless Brennan did not have its authorisation withdrawn by the regulator. Hoodless Brennan changed its name a number of times over the years and in 2013 it became Beaufort Securities. L&C has provided evidence to show in January 2015 L&C entered an agreement with Beaufort Securities relating to the investment of funds in connection with the L&C Simple SIPP. Beaufort Securities acknowledged that L&C held funds for members, that the investment strategy was to be agreed with the members and that L&C would have the right to veto transactions which in its opinion would conflict with the requirements of HMRC or the FCA. Beaufort Securities, and a Mr S at that firm, appear in most if not all the MA complaints. On 30 October 2016 Mr S and Beaufort Securities were mentioned in a column in The Times which said: “Last year he was named most promising newcomer at the City of London wealth management awards, but this year is looking less rosy for [Mr S], a fund manager at Beaufort Securities. The stockbroker confirms that [Mr S] … has been suspended pending investigation. The problem is something of a mystery, although City insiders believe it could be related to investments made in small companies in places such as Cyprus, Gibraltar and Mauritius. The Financial Conduct Authority is said to have knocked on Beaufort’s door a few weeks ago. [Mr S] is marked as “inactive” on the FCA’s register on 7 October…” It is now known that the FCA did investigate the conduct of Beaufort Securities and Mr S in 2016. That investigation led to the publication of a Final Decision Notice of 24 July 2024. The FCA investigation and Final Decision relate to the period from 1 January 2015 to 12 April 2016. Most of the MA complainants’ L&C SIPPs were opened during that period. The Final Decision notice shows the presence of poor practice at Beaufort Securities at around the same time as the events in the MA complaints. The Final Decision notice includes the following:

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“2.2 Beaufort Securities Limited (“BSL”) was a small to medium retail advisory stockbroker that was authorised by the Authority to conduct regulated activities. In March 2014, BSL launched a white-label [SIPP] named the Beaufort SIPP (“Beaufort SIPP”). On 28 January 2015, BSL was granted permission by the Authority to conduct the regulated activity of ‘managing investments’. From that date, BSL’s business model changed significantly with a new focus on carrying out discretionary fund management for pension trustees when underlying pension holders were retail clients.” Although Beaufort Securities had launched the Beaufort SIPP it did not provide services only to holders of that SIPP. The FCA’s Final Decision says that a Mr S was the discretionary fund manager in Beaufort’s London office and he was part of a team that grew the DFM service. Mr S was named as DFM in many, though not all, of the MA complaints including Mrs M ’s complaint. The Final Decision went on to say: “2.9 During the Relevant Period, Mr S participated in a scheme involving a number of firms and individuals (the “Scheme”). Other participants in the Scheme included an unregulated individual (“the “Unregulated Individual”) who oversaw the Scheme, certain introducers (“Introducers”) and certain IFAs… 2.10 The Scheme involved certain participants (principally the Unregulated Individual and his firms) identifying companies (the “investment Companies”) which were seeking to raise capital and contacting them with the promise of receiving significant capital through BSL’s DFM Service. The investment companies issued bonds or shares which were nearly all high-risk products of limited liquidity. 2.11 In return, The Investment Companies were to make substantial payments by way of marketing fees, marketing allowances, introducer fees, commission and other offers (“Marketing Fees”) which would be distributed between the participants in the Scheme… 2.12 Incentivised by Marketing Fees, the IFAs involved in the scheme would advise pension holders, who had been contacted by Introducers involved in the Scheme, to transfer or switch existing pensions to the Beaufort SIPP. 2.13 Certain Introducers would seek to: (a) influence the advice of the IFAs and Mr S’s investment management decisions, (b) direct Mr S in relation to the investment of pension holders’ funds into specific investments (including the Underlying Investments) and (c) direct the IFAs to act as their agent. 2.15 Pension holders’ funds were placed in the Strategic Income Portfolio and thereby invested in the Underlying Investments, regardless of whether they were suitable for those pension holders, so those involved in the Scheme would receive a share of the Marketing Fees… 2.16 In total, approximately £5.9 million in Marketing Fees was paid to the various participants in the Scheme, of which Mr S received over £1.25 million. 2.17 These Marketing Fees were separate from the fees charged by the DFM Service and IFAs advising the pension holders, which were payable by the pension holder in the usual way…

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2.18 The payment of these marketing Fees was not disclosed to the pension holders and was to the ultimate detriment of the pension holders whose funds were invested in the Underlying Investments. In some cases, the payment of Marketing Fees directly resulted in certain Investment Companies facing significant financial difficulty and in turn substantially impaired the value of the Underlying Investments. 2.21 On 13 October 2016, following the intervention of the Authority, BSL agreed to a voluntary requirement which was imposed by the Authority…and had the effect of preventing it from accepting new money from new and/or existing pension holders into the DFM Service. On 20 December 2016, at the Authority’s request, BSL agreed to a voluntary variation …of its…permission to carry on regulated activities… 2.22 On 1 March 2018, BSL and its related firm Beaufort Asset Clearing Services Limited entered administration and special administration respectively.” In 2024 the FCA fined two financial advisers and Mr S in relation to their participation in the Scheme referred to above. The FCA said Mr S was dishonest and failed to act with integrity and that his conduct exposed a large number of pension holders to significant risk and in many cases caused pension holders to suffer actual loss. So far as I am aware the Unregulated Introducer referred to above was not Mr B who is the unregulated introducer common to all the MA complaints. To be clear, I do not say that L&C would or should have been aware of the FCA investigation into Beaufort Securities at the time of the MA complainants’ applications to it. Or that it should have been aware of the Scheme referred to in the decision. The above does however show how it is possible for introducers to be paid for introducing business and how that financial interest can lead to inappropriate investments that are not in the interests of the consumer. So far as I am aware Hoodless Brennan/Beaufort Securities has always been active in the “small cap” area of the market – that is smaller capitalised companies often seeking capital from investors (rather than predominantly the trading of main market shares after the shares have been issued). Such investments are generally considered higher risk and are not generally suitable for most ordinary retail investors. In 2017 MA was concerned about the number of investments made by Beaufort Securities in securities which had become illiquid. It asked Beaufort Securities for details of such investments and MA exhibited Beaufort Securities’ response to the complaint it made to L&C for MA complainants. This shows a number of securities that were not main market securities. Those that were listed were listed on secondary markets in Cyprus, Frankfurt and the CXG and NEX exchanges. The securities fit the general description of higher risk non- main market investments – the sort of investments in the area of the market Hoodless Brennan/Beaufort Securities was active in. MA and the introducer Mr B: As mentioned, MA and Mr B are a common feature of the MA complaints against L&C. Having considered all the evidence and submissions in this case and a small number of other MA cases, and in my experience of the other MA complaints and published decisions against MA, and some published decisions relating to PF and its appointed representative FW, I have formed views which I set out below. I think the complaints as submitted by MA do need to be treated with caution.

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I think it is likely the then CEO of MA who wrote those complaint submissions considered them to be correct, but I do not think they were right in some respects. I consider it more likely than not the Mr M did not leave full and complete file records or otherwise provide a full account of his dealings with Mr B. I consider that Mr M’s dealings with Mr B at the time of MA’s application to become an introducer with L&C was considered by Mr M to be a legitimate business arrangement which was to be carried on using the one-off transaction/split advice model Mr M did commit to writing in recommendation reports such as in the case of the earlier applicant complainant I mentioned above. I think Mr M turned a blind eye to what would happen after the client was mandated back to FW. I think he thought that if there was distance between him and his firm and the eventual investments it was literally not his business to worry about. I think Mr M thought the plan navigated an acceptable way around the rules just as other advisers before him had thought giving limited advice complied with the rules. Again, I say this because of Mr M’s and MA’s openness about its one-off transaction or transaction only service. Next, it has to be remembered that Mr B was an introducer – that it was his business. He was carrying on this business and will have expected to be remunerated for it. Mr B had an introducer relationship with a number of businesses including the firm FW, an appointed representative of PF, and the firm MA. It should be noted that introducers are a feature of the financial services landscape. Some introducers may be guilty of wrongful conduct. That does not mean all introducers are. The role of an introducer is not inherently inappropriate. While I have not seen documented evidence to show all the relationships which I consider to be relevant in the MA complaints I think that the facts largely speak for themselves and show that Mr B was also an introducer for: • Horizon Stockbroking • OWG Bonds and Strand Capital to make those investments in OWG Bonds • Beaufort Securities. I consider it implausible that the introducer Mr B was involved in the SIPP applications of the MA complainants who then all ended up with investments in OWG Bonds through Strand Capital and/or with accounts with and investments through Beaufort Securities, and/or investments with or through Horizon Stockbroking and that Mr B was not an introducer for those businesses also. I also consider it not merely coincidental that at least one and possibly more FW clients ended up with investments from that same small group during the same late 2014 early 2015 period. I do not know how Mr B was remunerated as an introducer. It seems likely to me that Mr B was not directly remunerated by MA for the referrals he made to it. It seems likely MA would have seen any such payment to Mr B in its accounts when investigating the MA complaints and would have admitted them. Or such payments would otherwise have come out during the complaints process against it and/or against L&C. It is possible Mr M paid Mr B personally and recovered that outlay indirectly through greater earnings at MA. But such personal off the books dealing though possible seems unlikely.

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It seems more likely to me that Mr B was paid some form of remuneration for the introduction of investors in OWG Bonds/Strand Capital and Horizon and Beaufort Securities. I consider that the Final Notice decision against Mr S of Beaufort Securities shows that the payment of fees by Beaufort Securities to an introducer of business is a realistic possibility. The fact of the repeated introduction to OWG Bonds and to a lesser extent Horizon indicates some form of payment from them is also likely. I also consider that Mr B will have thought this was, at least largely, a legitimate way to do business. I do not think he necessarily will have been open about the level of any payments he received for introductions with his clients. But I do think he would have been reasonably open with Mr M of MA about these matters, without perhaps disclosing the amounts he would be paid. It is my view that at the time MA applied to be an introducer to L&C, Mr M of MA will have known that Mr B introduced business to Horizon and OWG Bonds/Strand Capital and to Beaufort Securities (or was planning to do so) and that he would receive some form of remuneration for doing so. And I do not think Mr M necessarily thought this was intrinsically wrong. It is my view that it is more likely than not that Mr M of MA had in mind an arrangement under which Mr M would advise on the pension transfer with the client being referred back to FW so that the consumer would make investments with FW upon which Mr B would be paid fees or commission. In this way MA would be paid for its advice by the client (from their pension) and Mr B would have the opportunity to earn his fee or commission if the client invested in OWG Bonds and/or through Horizon and/or through Beaufort Securities. I think this was the business model Mr M had agreed with Mr B and FW when he approached L&C in late 2014 in order to become an introducer of business to it. Mr M would on behalf of MA give one-off transaction advice and then the client would be mandated back to FW (with whom Mr B also had a relationship). That is in effect the process recorded on the recommendation report in early 2015 I mentioned above. Further, it seems more likely than not that Mr M thought this was a business model that was perhaps operating in a grey area where he had found a way of complying with his understanding of the letter of the rules if not the spirit, rather than some form of criminal conspiracy that must be concealed from all. I say this because MA had an approach it clearly referred to as “transaction only” which it did not try to conceal, and which Mr M was intending to use and did use in early applications to L&C. It appears to have thought it was in order for it to recommend and arrange a pension transfer and then leave the later investments to FW. I accept that this original plan seems to have evolved over time – and it is possible this was because FW became subject to closer supervision by PF during 2015 meaning it could no longer arrange the investments Mr B had an interest in. Whatever the reason for the later change, I consider referral back to FW (where Mr B would have the opportunity to earn a fee or commission from the investments the client made) was how Mr M at MA originally intended this business to be carried on when he made contact with L&C in late 2014 to arrange to introduce SIPP applications to it. And I think it is more likely than not that at that time Mr M would have been prepared to disclose this plan, at least in broad terms, to L&C if asked since the evidence shows that Mr M was prepared to put in writing that clients were to be mandated back to FW for investment advice after the pension transfer (even if, as a later case, that is not the precise process followed in Mrs M’s case). Due diligence carried out by L&C:

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L&C did carry out some due diligence checks on MA. It also made checks on Strand Capital and on Beaufort Securities and Horizon Stockbroking. In general terms those checks consisted of checking those businesses were regulated and had appropriate permissions. And putting in place a permitted investment list and requiring agreements under which those businesses agreed not to make investments that were not on the permitted investments list. In the case of Horizon Stockbroking and CFD investments, L&C made a further, conditional agreement as an exception to its permitted investments list. In broad terms, having satisfied itself that each business was regulated, L&C considered that it could rely on those businesses to act appropriately. Its processes or procedures did not involve many or any further steps. Was this enough in the circumstances? An important circumstance here was that L&C was providing a non-advisory service. I have not forgotten that point and I do not overlook it. In my view L&C was right to check the regulatory status of the businesses it was dealing with in its capacity as a non-advisory SIPP operator. And it was entitled to take some comfort from those firms being regulated. It was not however reasonable to in effect decide there was no further action required once it was established that a firm was regulated, had appropriate permissions and a satisfactory disciplinary record, and agreed to its permitted investment list requirement. L&C was not authorised to give pensions advice, but it was a professional in the pensions field. It knew, or should have known, that ordinary retail consumers are vulnerable in this area in that they often lack a good understanding of matters relating to pensions and investments. L&C as a pension provider will have been well aware of the benefits of successful pension provision and will have been just as aware of the drawbacks of having insufficient pension provision - whether through a failure to plan or through the failure of plans. And L&C will have been aware that some consumers have, in relation to their pensions, been taken advantage of both in the sense of being given poor advice and in the sense of being scammed or defrauded. When either happens the consequences for consumers can be extremely serious. Plans for long term financial security can be completely ruined. L&C will have known in 2014 and 2015 that regulated as well as unregulated businesses have been involved in cases where consumers have been caused considerable detriment in this way. L&C knew, or should reasonably have known, that dealing with regulated firms, was not a guarantee against problems. The point is an obvious one. Most years there are reports of the regulator fining regulated firms for conduct that has caused harm to their clients. The point also comes through from the pension transfer alerts in 2013 and 2014 referred to above. And also in the regulators’ publications addressed to SIPP operators referred to above in 2009, 2012, 2013 and 2014. Accordingly, bearing in mind the Principles and good industry practice, L&C should in relation to MA have done more than check the regulatory status of the firm and the individual with whom they were dealing. In my view meeting the standards required of a non-advisory SIPP operator by the Principles, and good industry practice, required systems or processes such as getting to know and understand its introducers so as to reasonably ensure they are satisfied the

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introducer (MA in this case) is appropriate to deal with. In my view L&C should have had processes in place to reasonably satisfy itself about the type of business MA was proposing to introduce to it. It should have asked about matters such as why MA was seeking to start a business relationship with it, about how it sourced its business, its typical clients and the types of investments it recommends. L&C should have asked about whether MA worked with any introducers and if so who. It should also have asked about that introduction process. In short L&C should reasonably have asked the sort of questions that would have led to one of two outcomes. One possibility is a refusal by MA to give answers or answers that seemed evasive. This would clearly have been a cause for serious concern. The other possibility was that Mr M would have given reasonable answers to L&C’s questions and that would have allowed L&C to understand that: • MA was working with an introducer. • the introducer was Mr B who also worked with FW. • FW got leads from the Pension Wise/Money Advice website and when that involved pension transfers Mr B would introduce the client to MA. All of the above matters are relatively uncontroversial and there is no reason why they would not have been disclosed. I also consider that MA would have explained that the intention was that MA would give advice on the transferring of pensions to a SIPP on a one-off transaction basis and that the client would then be mandated back to FW for advice on investment in the SIPP. Again, this was documented by MA. It was not concealed. There is no reason to say that MA would not have explained to L&C that this was the plan if asked. Bearing in mind the role of Mr B, L&C should reasonably have asked questions about him, and caried out its own research on him. L&C is a business, and it will have a commercial mindset. L&C should have realised an introducer acts as an introducer by way of business and does so expecting some form of economic reward. L&C should have wanted to know what was in it for Mr B? How was he going to be paid? It would have wanted to know this because L&C would want to understand if this point was likely to unduly influence the outcomes for the potential new members. It should have been alert to the possibility of consumer detriment when an introducer is incentivised to make introductions. Accordingly in my view L&C would reasonably have discovered from those questions of MA and its own enquiries that: • Mr B acted as an introducer for other regulated adviser firms. • Mr B acted as an introducer for OWG Bonds, Strand Capital, Horizon Stockbroking and was or was planning on becoming an introducer for Beaufort Securities. (Beaufort Securities apparently did not have permission to manage investments until early 2015 and L&C would have been thinking about MA’s application to be an introducer in late 2014 and maybe into January 2015 if it had taken more time in considering that application. Even if Beaufort did not yet have permission to manage investments at the time L&C considered MA’s application to become an introducer to it, it seems likely Beaufort Securities

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would have told introducers and potential introducers to it that it had applied for and expected to get permission to manage investments. Beaufort Securities would have been promoting itself. And as it was already offering the Beaufort SIPP and as Mr B seems to have been active in the higher risk/growth-oriented areas in which Beaufort Securities was active it seems unlikely Mr B was not in touch with Beaufort Securities and aware of its business expansion plans.) Further thought should have been given by L&C about Strand Capital and OWG Bonds, and about Horizon and about Beaufort Securities, in general terms, to put more context around the consideration of Mr B. This would have meant that at the time of MA’s application to be an introducer in late 2014, L&C would have noted: • It was already in contact with Strand Capital. And that Strand Capital was wholly owned by OWG meaning there was a potential conflict of interest in Strand Capital being involved in any OWG investment. (L&C may have been told that Strand would receive no payment for investing in OWG Bonds but L&C still knew there was potential for a conflict of interest and that it was still possible for Strand Capital to have an interest in promoting OWG Bonds even if no commission was being paid to it.) • The OWG Bonds Series C had recently been issued. Unlike series A and B which were unlisted, Series C was (or was intended to be) listed. While OWG was a UK company the listing was on an exchange in Denmark subject to relatively light touch regulation intended for smaller, newer, companies that could not yet meet the criteria for listing on a more established exchange. L&C would be aware that investment was unlikely to be suitable for most ordinary retail investors. • It also already had dealings with Horizon Stockbroking which was involved in CFD trading. And although it had reached an exceptional agreement with Horizon Stockbroking, it was still aware that CFD trading was a particularly high-risk area. Though this may have been of interest to some L&C members it is not suitable for most pension investors. It is such a high-risk area that the possibly distorting effect of an introducer promoting this form of investment and being incentivised for doing so ought to have been a concern. • That Beaufort Securities was formerly Hoodless Brennan - a firm with a poor disciplinary record. Hoodless Brennan/Beaufort Securities was a firm that was still permitted to trade by the regulator and it had been active in what is often called the growth and/or “small cap” area – that is smaller new companies trying to raise capital. I do not say there was anything wrong with this, but this area is a higher risk area. Though this may have been of interest to some L&C members it was unlikely to be suitable for most pension investors. Beaufort Securities was trying to rebuild its reputation including by moving into new areas such as the Beaufort SIPP from March 2014 (and was apparently seeking permission to manage investments which permission was granted in January 2015.) L&C might have had some concerns about Beaufort Securities and wondered why it (L&C) was being chosen in preference to the Beaufort SIPP by an introducer who had or was developing a connection with Beaufort Securities. (I do not say this point alone was a bright red flag, but it was part of an overall picture which was to be considered by L&C.) In my view when L&C considered all of the information that it should reasonably have been able to gather, a number of points should have given it cause for concern. Those points include: • MA was to be involved in pension transfer cases. Although MA was authorised to

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give pension transfer advice, and the suitability of that advice was MA’s responsibility, MA was known to be operating in an area where the risks of consumer detriment were high and the starting presumption is that advice to transfer is likely to be unsuitable. So there was a need for caution generally. • The was an unregulated introducer involved who seemed to be a central figure. • Unregulated introducers are not necessarily and automatically to be avoided or vetoed but there is a need to be cautious. An unregulated introducer might cross the line into giving advice they are not authorised to give. They will promote the benefit of anything they introduce and may not do so in an impartial way. Their involvement in a process, and particularly their financial interests in a particular outcome being achieved, can create distorting pressures on a consumer’s decision making. • Mr B had had a firm whose regulatory permissions had been withdrawn. • The investments or investment providers Mr B also had connections with could not be considered vanilla or low risk choices. There is nothing intrinsically wrong with such investments. But it means that if the introducer’s involvement distorted things it could well be in the direction of higher risk investments. L&C ought to have had concerns about the possibility of an introducer being incentivised to promote very high-risk activities such as CFD trading with Horizon Securities, and/or being incentivised to promote higher risk investment such as the OWG Bond, and the sort of investments Beaufort Securities was likely to be involved with: non-main market higher risk securities. In my view a SIPP operator should as a general point have been cautious about the involvement of an unregulated introducer when L&C was considering MA’s application to be an introducer in late 2014. And in my view L&C should have noticed and been concerned about the points mentioned above in relation to the involvement of Mr B in business to come from MA. Further there was the process MA was proposing which ought to have struck L&C as odd from the outset. Why, for example, was an appointed representative of PF without pension specialist status not referring work to another PF appointed representative firm that could advise on pension transfers? L&C might also have consulted its own records and reviewed its dealings with FW and realised that it had referred applications to it on a restricted advice basis. If it had done this it would have wondered what was going on. Why was MA proposing not to give advice on investments in the SIPP? It was authorised to do so. There had to be some economic reason in the business model proposed by MA. Was it that MA had to do that to give Mr B opportunity to earn his fees or commission? And if so, did that mean the consumer was not getting impartial advice about the investments to be made in their SIPP with L&C? And/or was it that MA was not willing to recommend those investments because it did not think they were suitable? The split advice model looks unnatural. It looks unnecessarily involved. It looks suspicious. It looks like something that might not be putting the interests of the customer first. On top of that is the clearly stated view of the regulator that an adviser who advises on a transfer of a pension into a SIPP ought to advise on the suitability of the whole transaction including the investment to be made in the SIPP. So the business model proposed by MA did not really fit in with the regulator’s expectations or good industry practice. An indication of the asset allocation that might be suitable for a client’s attitude to risk does not really amount to:

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“…consideration of the suitability of the overall proposition, that is, the wrapper and the expected underlying investments…” MA may have thought it had found a way around FCA’s requirements, and thought it could answer yes to the question about whether its advice had taken account of the intended underlying investment strategy, but in my view L&C should have been doubtful about that one off transaction/split advice model. This one-off transaction/split advice model alone ought to have been a serious concern to L&C. In my view this point alone ought to have meant that L&C would not accept instructions from MA. But this was not the only point that could and should reasonably have been discovered by L&C before it decided to accept business from MA. This point together with the other concerns L&C ought to have had about Mr B and his role in the matter and the real risk that his involvement would have a distorting effect, mean that L&C should have decided not to accept the introduction of business from MA. I also consider that MA’s proposed business model should reasonably have coloured L&C’s view of MA. L&C should have been concerned by the fact that Mr M on behalf of MA would think this an appropriate way to proceed. This means that if L&C had said it was not prepared to accept introductions from MA because of, say, the regulator’s guidance about limited advice in pension transfers, it would not have changed its mind about dealing with MA had it tried to persuade L&C to do so by saying it would change its business model. This was particularly the case given that L&C was aware that it did not have any process in place for checking that those it did business with stuck to the terms of their permitted investments list agreements. L&C should have been suspicious that even if clients were not mandated back to FM, Mr B’s involvement would still lead to outcomes for the L&C SIPP members which involved investing in the investments with which Mr B had a connection. This is what in effect happened with MA complainants such as the earlier MA complaint I referred to who was not mandated back to FW as originally planned, and to later MA applicants such as Mrs M, after the original plan seems to have evolved slightly, and the “mandating back to the original adviser” point dropped from MA’s transfer advice. In my view all the above matters could reasonably have been discovered from reasonable checks in late 2014 and/or early 2015 and certainly before Mrs M’s application in April 2016. I do not say that each of the points mentioned above was necessarily a major point on its own, or that they only amount to something when each and every mentioned point is added together. The points accumulate and build up a picture. And that picture does not need to be fully emerged or completely in focus to be acted on. L&C was entitled to, and in my view reasonably should have acted on an overall impression. And that overall impression ought to have been one of serious concern that consumer detriment could very well result from MA’s proposed business model. Or, alternatively, as I have mentioned it may have been that answers to reasonable enquiries may have been refused, or evasive answers given, that meant L&C could not satisfy itself that all was in order. Either way, in my view if L&C had carried out appropriate due diligence on MA it would not have agreed to accept SIPP applications from it. And in this case that means Mrs M would not have applied for a SIPP with L&C. L&C’s due diligence on investments via Strand Capital, Horizon Stockbroking and Beaufort Securities

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Given my view about the due diligence carried out in relation to MA, I do not consider that it is necessary for me to also consider, and comment on in detail, L&C’s due diligence processes in relation to Strand Capital and OWG Bonds, Horizon Stockbroking and Beaufort Securities. I do however have serious misgivings about L&C’s due diligence processes in relation to the investments made in the SIPP. In my view L&C’s processes were ineffective because of its decision to take on trust that the regulated firms would act appropriately without having any effective process for monitoring that they were doing so. I do not consider that was a reasonable position to take. As mentioned above, L&C should have been aware that some regulated firms do sometimes fail to act appropriately. In my view L&C should reasonably have been monitoring, from the outset, the investments being made for its members. It should have had processes in place to ensure compliance with its requirements and to otherwise allow it to identify anomalous investments such as unusually large investments and investments that might otherwise cause concern. In my view reasonable processes should provide for checks at the start of a relationship so that any issues can be spotted and acted on if there is any misunderstanding about what is required or deliberate ignoring of requirements. Such steps should not just be made later when there is a larger mass of evidence to review. When a relationship is new L&C ought to have checked that things were getting off to a satisfactory start and not just wait for a trend to emerge over time. I do not know which was the first MA application, but I am aware that at least one MA complainant applied for a SIPP with L&C in December 2014. That applicant also applied for an account with Strand at that time and an investment was made in OWG Bonds following an execution only letter to Strand Capital in early January 2015 instructing Strand Capital to buy £200,000 worth of OWG Bonds. This is clearly a large investment in an unusual investment and if L&C had been monitoring the investments made on behalf of its new MA clients it should have noticed and had concerns about this. If L&C had looked into this investment it would have discovered it had been arranged on an execution only basis. A large execution only transaction, particularly one involving an investment connected to Strand Capital, for a client who was supposed to be an advised client should have caused concern. Further, the consumer in that case denies signing the execution only letter. It is my view that these matters could and should have been discovered by L&C before Mrs M’s application in April 2016. And so even if L&C had decided to accept applications when first approached by MA it should have reversed that decision by the time of Mrs M ’s application. What should have happened? It is difficult to know what would have happened if L&C had acted as it should. Mrs M wanted pensions advice but the advice she received was tainted by the involvement of an unregulated introducer who influenced the decisions made by Mr M at MA and by Mrs M. L&C might say that if it hadn’t accepted business from MA and/or permitted the investments that were effected in its SIPPs, MA would have gone elsewhere and that Mrs M’s transfer and investments would still have been effected with a different SIPP provider. I don’t think it’s fair and reasonable to say that L&C should not compensate Mrs M for her loss based on

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speculation that another SIPP operator would have made the same mistakes as I’ve found L&C did. I think it’s fair instead to assume that another SIPP provider would have complied with its regulatory obligations and good industry practice, and therefore wouldn’t have accepted business from MA involving Mr B including Mrs M’s application. Further, I think it’s very unlikely that advice from a different advisory business would have resulted in Mrs M taking the same course of action. If L&C had declined to accept business from MA and Mrs M had then sought advice from a different adviser, I think it’s unlikely that another adviser, acting reasonably, would have advised Mrs M to transfer into the L&C SIPP in particular and make the investments that Mrs M actually made. Rather, I think it’s fair and reasonable to conclude a different advisory business would have complied with its obligations and given suitable advice. To decide what would have most likely happened here, I’ve considered Mrs M’s circumstances at the time of the advice, as well as her comments surrounding what she would have otherwise done. Looking at the available information from the time this said, amongst other things, that Mrs M was aged 58 and had savings/shares of around £11,000. She wanted to retire the following year and her main objective was to take TFC to repay her mortgage (which was £70,000), as well as to assist in purchasing a property abroad. It seems Mrs M wanted TFC of around £125,000 to be able to do that. And that another main objective was to be able to leave residual funds upon her death to her children. I’ve also taken into account the valuable benefits that would have otherwise been available had Mrs M remained in her OPS until her normal retirement age of 60 (TFC of £95,620 with a reduced pension of just over £14,000 per year) or taken early retirement at age 59 (TFC of around £86,000 with a reduced pension of just under £13,00 per year). And that this was seemingly her only source of income in retirement, aside from state pension. Mrs M doesn’t seem to dispute that she wanted to and would have transferred her pension though. Instead, she has told our Service that she wanted to transfer from her OPS to access her benefits and ensure these weren’t lost on her death. She’s explained that the initial TFC she took from the SIPP following the transfer of only around £55,000 was to help her daughter buy a house. Mrs M said she had wanted to pay off her mortgage and buy a house abroad still and that she would have otherwise gone ahead with that plan, drawing down further sums from the SIPP to do so, if it hadn’t been for the loss of a large proportion of her investments. There’s an email from Mrs M to MA in in December 2016, shortly before she was made aware of problems with Beaufort, which supports that this was her intention, as she said she wanted to know about the status of her investment as she was planning to pay off some of her mortgage in January 2017. And I understand that even without taking further sums as originally intended to do the things she’d planned, Mrs M still took around £129,000 in total in TFC from her SIPP. Mrs M has said though that the investments were too high risk, she had a low to medium risk profile and loss capacity, as reflected by the fact find, such as when she said a major proportion of her fund should be protected and that she didn’t mind a ‘reasonable degree of risk’ and that she’d trusted that her funds would be invested as such. So, on balance, I consider it more likely than not that with reasonable advice Mrs M would not have invested the funds in and in an L&C SIPP in the way that she did. The investments made were largely because of the involvement of the introducer Mr B and are not the sort of investment choices that would have been recommended for an investor with such a risk profile by a regulated financial adviser acting reasonably in the circumstances.

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Accordingly, in broad terms this is the position Mrs M ought to be in, and ignoring for a moment any monies she has recovered from third parties or the FSCS, Mrs M has ended up in a worse position because of the failings of L&C. Is it fair to require L&C to compensate Mrs M? In similar cases, L&C has made points on this issue. One point is that given the sums recovered from MA and the FSCS there may be no unrecovered loss. Another point is that MA is solely responsible for any loss Mrs M has suffered and so it is unfair to require L&C to compensate Mrs M if there is any unrecovered loss. On the first of those two points, Mrs M should provide evidence of all the sums she has recovered from third parties including the FSCS and MA. Whether or not there is an unrecovered loss will depend upon a calculation of the loss which I will come on to below. As Mrs M has been paid compensation by the FSCS she will have agreed to assign to the FSCS her rights to make a complaint against others such as L&C. And she has already had the right to complain about L&C reassigned to her. The terms on which the FSCS agrees to such reassignments normally requires the claimant to agree to repay the FSCS from any money received from others (L&C in this case). That should be kept in mind here. Subject to this point about having to repay the FSCS, if there is no outstanding loss there will be no compensation for L&C to pay. However, given the sums invested by Mrs M, I think that’s unlikely to be the case. The next point is about whether MA is the only cause of Mrs M’s loss. L&C has referred to comments made by other Ombudsmen, when deciding complaints about MA. I will deal with this point briefly and I consider the following points relevant: • I am required to make the decision that I consider to be fair and reasonable in all the circumstances taking into account relevant law and regulations, Regulator’s rules, guidance and standards, codes of practice and, where appropriate, what I consider to have been good industry practice at the relevant time. • Our Service is an informal dispute resolution service and an Ombudsman’s decision in a case must be considered in that context. Comments made in one decision may be appropriate and reasonably worded in that context but should not be interpreted as formally determining issues beyond the scope of the complaint being decided. • Whether or not L&C was responsible for any of the loss suffered by the consumers was not in issue in the MA complaints decided by my colleagues. • And in any event, I am not bound by previous Ombudsman decisions. It is my view that L&C’s conduct was one of the causes of the loss Mrs M has suffered. I’m satisfied that the transaction would not have proceeded as it did if L&C had not accepted Mrs M’s applications from MA. I consider it likely Mrs M would have transferred her pension elsewhere, but unlikely that Mrs M would have done so into an L&C SIPP and made the investments she did. While I accept that MA is responsible for initiating the course of action that led to Mrs M’s loss, I consider that L&C failed unreasonably to put a stop to that course of action when it had the opportunity and obligation to do so. I am, accordingly, satisfied that if L&C had complied with its own distinct regulatory obligations as a non-advisory SIPP operator, Mrs M

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would not have transferred to the L&C SIPP. Further, that the investments Mrs M made in her SIPP would not have come about and the loss Mrs M has suffered would have been avoided. The DISP rules set out that when an Ombudsman’s determination includes a money award, that money award may be such amount as the Ombudsman considers to be fair compensation for financial loss whether or not a Court would award compensation (DISP3.7.2R). I consider it is fair and reasonable in the circumstances of this case to hold L&C accountable for its own failure to comply with its regulatory obligations, good industry practice and to treat Mrs M fairly. It is my view that it is appropriate and fair in the circumstances for L&C to compensate Mrs M for the full extent of the financial loss she has suffered due to its failings. I don’t think it would be appropriate or fair in the circumstances to reduce the compensation amount L&C is liable to pay Mrs M except by any sum(s) already recovered from third parties, other than the FSCS which Mrs M is obliged to repay. If Mrs M has been paid compensation by third parties (other than the FSCS) equal to or greater than the loss calculated in the way I set out below, no further payment will be due. However, I presently consider that outcome unlikely. Putting things right My aim is to return Mrs M as closely as possible to the position she would likely now be in if not for L&C’s failings. While, for the reasons given, I’m satisfied that Mrs M wouldn’t have otherwise transferred to an L&C SIPP and then invested in the way she did if it had complied with its obligations, I think on balance Mrs M is still likely to have transferred her pension elsewhere. I can’t state definitively which provider would have been used, or into what holdings, and in what proportions the monies would have otherwise been invested. So, having carefully considered this, and given the lack of certainty on this point (including about the specific provider, holdings, and the specific proportions, monies would have been invested in post- transfer had transfers elsewhere still been effected), for the purposes of quantifying redress in this case I think the fair and reasonable approach is to assume that the pension monies in question would have achieved a return equivalent to the FTSE UK Private Investors Income Total Return Index (prior to 1 March 2017, the FTSE WMA Stock Market Income Total Return index). I’m satisfied that’s a fair and reasonable proxy for the type of return that could have been achieved over the period in question. In light of the above, on a fair and reasonable basis, L&C should: 1. Calculate a notional value, as at the date of this decision, of the monies that were transferred into the L&C SIPP if they’d not been transferred into this. 2. Obtain the actual current value of Mrs M’s L&C SIPP, as at the date of this decision, less any outstanding charges. 3. Deduct the sum arrived at in step 2) from the sum arrived at in step 1). 4. Pay a commercial value to buy any illiquid investments (or treat them as having a zero value).

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5. Pay an amount into Mrs M’s L&C SIPP, so that the transfer value of this is increased by an amount equal to the loss calculated in step 3). This payment should take account of any available tax relief and the effect of charges. The payment should also take account of interest as set out below. 6. Pay Mrs M £500 for the distress and inconvenience the problems with her pension have caused her. I’ve explained how L&C should carry out the calculation, set out in steps 1 - 6 above, in further detail below: 1. Calculate a current notional value, as at the date of this decision, of the monies that were transferred into the L&C SIPP if they’d not been transferred into it. To do this, L&C should calculate what the monies transferred into the SIPP would now be worth had