Quilter Financial Services Limited · DRN-5860069

The complaint Mr T has complained about the advice he received from Quilter Financial Services Limited (‘Quilter’) to switch two personal pensions to a pension provided by Quilter Wealth. He’s also complained that he didn’t receive the annual reviews he’d paid for. What happened In September 2016 Mr T met with a financial adviser who was a representative of Quilter to discuss his pension provisions. Quilter completed a fact-find, noting that Mr T was a member of his employer’s group personal pension (‘GPP’) and he had an existing personal pension which had a value of around £32,000. It also noted Mr T held around £300,000 in bonds, Individual savings accounts (‘ISAs’) and fixed-term deposits, which was being managed by a personal finance manager at a bank. Quilter recorded that Mr T intended to retire at age 66 with an income of £25,000. It also noted that Mr T had received annual reviews in the past and wanted them to continue. Quilter assessed Mr T’s attitude to risk as ‘moderate’. In October 2016, Quilter recommended that Mr T transfer his personal pension to a Collective Retirement Account (a type of personal pension) provided by Old Mutual Wealth (now Quilter Wealth). It recommended that Mr T should invest his monies in a managed fund in line with his ‘moderate’ attitude to risk. In order to meet Mr T’s desired income at age 66, Quilter recommended that Mr T should make contributions of around £2,200 per month. However, Mr T declined this as he said he wanted to make a decision about that in the future instead. Quilter also recommended that Mr T should take its ongoing advice service, for which he would pay an ongoing advice charge (‘OAC’) of 1%. Mr T accepted the advice. At an annual review meeting in November 2018, Quilter assessed Mr T’s attitude to risk as ‘balanced’ and recommended a switch of investment fund. Mr T received further advice from Quilter in July 2021 to make a contribution to his pension. Mr T accepted this advice. In November 2021 Quilter recommended that Mr T transfer his GPP to the Quilter pension. At this time, a new attitude to risk assessment was completed and Quilter found Mr T had a ‘moderate’ attitude to risk. As such, it recommended the funds to be transferred should be invested in line with this risk appetite and also recommended that Mr T’s existing pension funds should be switched to the same new fund. In January 2023 Quilter advised Mr T to make a further contribution to his pension and Mr T accepted this advice. In September 2024 Mr T complained, with the help of a representative (‘CMC’) about the advice he’d received since 2016. Mr T didn’t think the advice was suitable as it resulted in him paying higher ongoing fees, and as a consequence of the switch he’d incurred unnecessary initial advice fees. The CMC added that the changing risk profile over the years demonstrated Quilter didn’t know its client and ultimately Mr T had been advised to take too

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much risk too close to his retirement. Mr T added that he hadn’t received all of his annual reviews. Quilter issued its final response in October 2024. It said Mr T had complained too late about the initial advice he received in 2016 and also any additional advice received more than six years before he complained in September 2024. Regarding the advice provided after September 2018, Quilter maintained it was suitable for Mr T and it was satisfied the adviser had discussed his attitude to risk in detail. It added that Mr T had received the annual reviews he’d paid for. Mr T remained unhappy and referred his complaint to the Financial Ombudsman Service. The CMC said Quilter hadn’t appropriately assessed Mr T’s attitude to risk, saying it shouldn’t rely on risk profiling tools alone. The Investigator was satisfied that Mr T had made his complaint about the initial advice in time, but thought Mr T would’ve known he hadn’t received the review he’d paid for in 2017 by the time he received his review in 2018. As such, she thought Mr T had complained about this too late under the Regulator’s Dispute Resolution (‘DISP’) rules, as he hadn’t complained within three years of him being aware of his cause for complaint. Ultimately the Investigator didn’t uphold Mr T’s complaint. She thought on balance that the initial advice was suitable for Mr T based on his circumstances and objectives. She was also satisfied the advice to transfer his GPP was suitable as this plan wasn’t flexible. The Investigator recognised that Mr T’s attitude to risk had changed on some occasions but thought that appropriate discussions had taken place and Quilter hadn’t simply relied on the output of questionnaires or risk-profiling tools. The Investigator was satisfied that Quilter hadn’t missed any annual reviews after September 2018 and noted that Mr T continued to engage with them, most recently in July 2025. Mr T’s CMC maintained the advice was unsuitable. It said Quilter failed to fully understand Mr T’s attitude to risk as demonstrated by the changing risk profiling results, and said Mr T didn’t have sufficient investment knowledge or experience to understand the risks involved. The CMC said Mr T should have been advised to switch funds within his existing pension scheme, meaning he wouldn’t have incurred a substantial fee associated with switching to the new arrangement. It added that the relatively low level of pension funds didn’t justify the need for ongoing advice and noted that Mr T turned down some reviews, which suggests they weren’t needed. The CMC also said that Quilter had changed Mr T’s retirement age to 75 to justify the higher fees. It added that there wasn’t any evidence to suggest that Mr T required flexibility so the advice to transfer the GPP was flawed. Overall, the CMC said the outperformance required above the higher fees Mr T would be paying as a result of the advice could not be justified. The Investigator wasn’t persuaded to change her opinion so the complaint was passed to me to make a decision. What I’ve decided – and why Jurisdiction The Investigator found that Mr T had brought the vast majority of his complaint points in time. She only found that the complaint made about the missed annual review, which would’ve been due around November 2017, hadn’t been made in time. This was because Mr T didn’t complain about this until September 2024, which was more than six years after the event complained about and more than three years after he was aware, or ought reasonably to have been aware, of his cause for complaint.

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Neither Quilter nor Mr T has disputed the Investigator’s jurisdiction findings. So, I don’t intend to address this further beyond saying that I agree with the Investigator’s findings here for the same reasons she’s given. Merits of the complaint I’ve considered all the available evidence and arguments to decide what’s fair and reasonable in the circumstances of this complaint. Suitability of the initial advice in 2016 I’ve carefully considered the information gathered by Quilter at the time about Mr T’s circumstances, objectives and existing pension arrangements, and taken account of the CMC’s response to the Investigator’s view. But overall, I’m satisfied the advice Mr T received was suitable. Mr T had an existing pension with AXA. During the fact-finding process, Quilter established that an investment manager, which I’ll call ‘Firm S’, chose the funds that Mr T’s pension was invested in and as that service had ceased, Mr T’s pension wouldn’t be monitored or managed going forwards. Quilter also noted that Mr T had been provided with annual reviews in the past and wanted them to continue. It seems to me that this service was likely provided by Firm S. And as the Investigator explained, Firm S was no longer authorised from August 2016 so it seems likely that Firm S no longer being authorised led Mr T to contact Quilter. The CMC has questioned this, saying that Quilter was recorded as being Mr T’s financial adviser on the paperwork submitted by AXA to Quilter on 29 September 2016. As such, it believes Quilter could’ve already had a relationship with Mr T. However, I’m satisfied that Quilter only became Mr T’s adviser in September 2016. That’s because Mr T had requested the servicing of the pension to be changed to Quilter on 20 September 2016, so that AXA could provide Quilter with the information it needed to provide advice on that pension. As such, the information provided by AXA on 29 September 2016 simply reflected that change. It therefore seems to me that Mr T approached Quilter because he had an existing relationship with Firm S, which had ceased, and he wanted to benefit from an ongoing advice relationship with a new adviser. I don’t think it was unreasonable that Mr T wanted to continue to receive advice at this stage in his life, given he expected to retire in around nine years’ time. As Mr T approached a representative of Quilter for advice, this meant that the adviser could only recommend a restricted range of pension and investments – I’m satisfied that Quilter explained this to Mr T as it is recorded in a meeting note. As such, Quilter couldn’t advise Mr T to keep his arrangement with AXA. However, I note that Quilter did tell Mr T he could carry out an internal fund switch with AXA, though that was not its recommendation because the selected fund meeting his risk appetite carried higher charges. Quilter assessed Mr T’s attitude to risk as ‘moderate’ and recommended that he transfer his AXA pension to a pension with Quilter Wealth. Overall, considering that Mr T’s existing pension wasn’t invested in line with his current attitude to risk, and that he wanted to receive ongoing advice, I’m satisfied that his existing arrangement wasn’t suitable for him and so it was reasonable for Quilter to recommend the transfer. This ensured Mr T could receive ongoing advice from Quilter and his pension monies could be reinvested in line with his attitude to risk. I’ve considered what Mr T’s CMC has said about the use of the risk profiling tool carefully and I agree that it shouldn’t be the sole tool used to determine a customer’s risk appetite.

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However, overall, I don’t think that the assessment of Mr T’s attitude to risk as ‘moderate’ was unreasonable. I’ll explain why. I’m satisfied that Quilter gathered sufficient information about Mr T’s financial circumstances, his experience and knowledge in order to assess his attitude to risk. Mr T wasn’t a particularly experienced investor; while he had a personal finance manager at a bank, it appears his investments were limited to bonds, ISAs and fixed-term deposits – it isn’t clear whether he had much experience investing in equities. But I think Quilter established that Mr T had some capacity for loss such that he was able to take a moderate level of risk with this pension. Mr T received income covering his outgoings, leaving significant disposable income and he was able to save regularly. Quilter also recorded in the fact-find that Mr T and his employer were also contributing to a workplace pension, though this detail is unfortunately missing from the recommendation letter. Quilter noted that Mr T had savings/an investment portfolio of around £300,000 and he still intended to work until at age 66, so he had capacity to build further savings. So, I think Mr T had a sufficiently long investment horizon such that he could tolerate some fluctuations in value. The risk profiling tool Quilter used to assess Mr T’s attitude to risk marked him as ‘adventurous’ based on the answers he gave. But it’s evident that this wasn’t a suitable investment strategy for Mr T based on his knowledge, experience and time to retirement. This was discussed with Mr T, and it was decided that ‘moderate’ was more suitable. This demonstrates that Quilter wasn’t simply relying on the risk profiling tool, and Mr T’s attitude to risk was arrived at following a reasoned discussion. So, I think that the investment recommendation to invest in a managed fund in line with Mr T’s ‘moderate’ attitude to risk was suitable. The CMC says that Quilter didn’t establish whether Mr T understood the risks of the arrangement, particularly the performance required to improve on the existing arrangements. I appreciate that the new pension, including OACs, would cost Mr T more overall. But I think this was made clear to Mr T in the recommendation letter and the illustrations provided; it clearly stated how much more per year he would be paying for the new arrangements in percentage terms. It also explained the outperformance required compared with the existing plan. So, I think Mr T proceeded knowing that the new arrangement would cost him more and that it would need to provide higher returns in order to improve his pension provisions. And while past performance is no guarantee of future performance, the past performance of the recommended fund compared with the existing investment fund performance demonstrated that the extra growth required to justify the higher fees was achievable. I’ve noted what the CMC has said about Quilter providing Mr T with illustrations with a retirement age of 75 – it says it did this to justify the initial advice fees that would be incurred as a result of the transfer. But I’m satisfied that Quilter provided Mr T with illustrations using a retirement age of 66 and 75 to further explain the impact of the initial advice fees. And I think it was made clear how much the new pension would need to outperform the existing one to cover the initial advice fee. It said that growth of 0.4% was needed to recover the impact of this charge at age 66, but this reduced to 0.2% if the funds remained invested to age 75 if he commenced drawdown when he retired. I don’t think it was unreasonable to provide Mr T with this information. I’ve taken account of the fact that Mr T’s pension arrangements were not likely to provide him with the level of income he desired at retirement. And that the higher fees potentially made that even more likely. But I’m satisfied that as part of the advice Quilter gave, it clearly explained what contributions Mr T would need to make in order to meet his needs based on his attitude to risk. It was Mr T’s decision to decline this part of the advice. And in any event, Mr T was still not likely to meet his target income by remaining in his existing arrangements.

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Mr T’s CMC has said that Quilter was required to give ‘best advice’. But under the Conduct of Business Sourcebook (‘COBS’) 9.2.1, Quilter was required to take reasonable steps to ensure that a personal recommendation was suitable for its client, after obtaining information about their knowledge and experience, financial situation and investment objectives. And COBS 9.2.2. says Quilter must also obtain information as is necessary for the firm to understand the essential facts about Mr T and have a reasonable basis for believing, giving due consideration to the nature and extent of the service provided, that the specific transaction to be recommended, or entered into in the course of managing: a) meets his investment objectives; b) is such that he is able financially to bear any related investment risks consistent with his investment objectives; and c) is such that he has the necessary experience and knowledge in order to understand the risks involved in the transaction or in the management of his portfolio. I think Quilter obtained all the necessary information in order to make a suitable recommendation here. I think it accurately assessed Mr T’s attitude to risk, and I think it established he was able to bear the investment risk given his substantial savings, income and time to retirement. I’m also satisfied that even as a lay person he had the necessary experience and knowledge to understand the risks posed by the new arrangement. The recommendation did not involve any additional complexity above the arrangements Mr T already had in place – he was simply replacing his existing personal pension with another, and was taking an ongoing advice service which he could cancel if on reflection he no longer considered it was needed. Overall, I’m not persuaded the advice Mr T received from Quilter here was unsuitable. Change of attitude to risk in 2018 At an annual review meeting in November 2018, Quilter assessed Mr T’s attitude to risk as ‘balanced’ and recommended a switch of investment fund. I don’t think that was advice was unsuitable based on the information gathered by Quilter at the time. Mr T’s CMC says that this change in Mr T’s risk appetite so soon after the initial advice demonstrates that Quilter didn’t do enough to know its customer. But I’m satisfied that the assessment was reasonable and took account of Mr T’s wider circumstances. The risk profiling tool outcome showed Mr T had a ‘moderate’ attitude to risk, which is the category Quilter ultimately arrived at in 2016. However, it appears that following a discussion, Mr T wanted to reduce the risk he was taking slightly and it was agreed that his attitude to risk was now ‘balanced’. It should nevertheless be noted that the difference in these risk profiles was fairly small – I would consider both to be indicative of a medium risk-taker, with the difference being the weighting towards equities in their portfolio. Ultimately, I don’t think this assessment was unreasonable or resulted in an unsuitable recommendation for Mr T. Suitability of the advice to switch the GPP In November 2021 Quilter recommended that Mr T transfer his GPP to the Quilter pension. Quilter found Mr T had a ‘moderate’ attitude to risk and recommended the funds to be transferred, as well as his existing funds, should be invested in line with this risk appetite. By this time, Mr T had stopped working for his employer and was self-employed. As such, this pension was no longer receiving contributions and it couldn’t facilitate adviser charging. It was also subject to a life-styling investment strategy, meaning that less risk was being taken as Mr T approached his normal retirement age. As the GPP wasn’t invested in line with Mr T’s current attitude to risk, and Mr T’s main pension was held with Quilter, I don’t

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think the recommendation to transfer the benefits held in the GPP to the Quilter pension was unsuitable. This allowed Mr T to consolidate his pensions, have them all invested in line with his attitude to risk and to receive ongoing advice on the entirety of his pension funds. I note that Quilter also recommended the transfer of the GPP on the grounds that it didn’t allow for flexible drawdown. Mr T’s CMC says there isn’t evidence to support that Mr T required this, but given the majority of his pension funds were held in a flexible pension with Quilter, it seems logical that Mr T would want flexibility for all of his pension funds. But even if I was satisfied that Mr T didn’t want flexibility, I still think the recommendation was suitable overall for the reasons given above. Again, I recognise that this involved additional costs. Mr T paid an initial advice fee and would pay higher charges going forwards. But I think Mr T was in a fully informed position here. Illustrations were provided based on retirement ages of 66 and 75. And in the recommendation letter, Quilter provided cost comparisons in percentage and monetary terms as well as the outperformance required. Ultimately, Mr T was happy to proceed on this basis. I appreciate that Mr T’s attitude to risk assessment again resulted in a change, back to ‘moderate’. But I still think that this was reasonable based on the information gathered at the time. Overall, I don’t think that Mr T was being advised to take too much risk with his pension funds at this stage. Although Mr T would likely be starting to draw down funds in around five years, the intention was for the remaining funds to be invested for the remainder of his life. He also still had still had sufficient capacity for loss as he held around £240,000 in savings. Ongoing advice reviews Mr T agreed to take Quilter’s ongoing advice service where Quilter would review his circumstances and objectives each year to ensure his pension remained suitable for him. Mr T complains that he didn’t receive all the reviews he was entitled to. Like the Investigator, I’m satisfied Mr T received the reviews he was entitled to after September 2018. I can see that on occasions Mr T was advised to make further contributions to his pension, which attracted separate advice fees. But where this advice was given at a similar time to when the annual review was due, I’m satisfied that the review which the OAC paid for was carried out separately. I recognise that in 2019 Mr T declined to have the review he was entitled to in that year. But I don’t think it would be fair or reasonable for Quilter to refund the OACs that paid for the review in this year, given that Quilter offered the review to Mr T and it was ready, willing and able to provide it to him. This is consistent with the findings the Regulator published in its review into ongoing financial advice services in February 2025. My final decision For the reasons set out above, I’m not upholding Mr T’s complaint. Under the rules of the Financial Ombudsman Service, I’m required to ask Mr T to accept or reject my decision before 26 March 2026. Hannah Wise Ombudsman

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