Quilter Financial Services Limited · DRN-6253290

The complaint Mr C’s representative has complained, on his behalf, about the suitability of the advice provided by an appointed representative of Quilter Financial Services Limited to transfer the value of defined benefits (“DB”) pension he held in an employer’s pension scheme to a personal pension policy (PPP) in 2020. What happened In October 2019, Mr C met the representative of Quilter to discuss his pension arrangements. Mr C’s representative has submitted the following about this: “Mr C recalls contacting a local Financial Adviser firm as he wanted to simply find out what his pension was worth and how this would affect his retirement. He was open minded regarding the discussions held with the adviser, which resulted in him being advised to transfer his DB scheme. Mr C followed the advice given to him.” On 24 April 2020, Quilter issued a suitability letter to Mr C. The fact find document and the suitability letter recorded the following about Mr C’s and his wife’s circumstances: • Mr C was 56, married and his wife was 53. They had two non-financially dependent children (although one lived with them). • Mr C was employed, earning around £25,000 pa. His wife earned around £27,000 pa. • Mr C intended to retire at 60 and his wife at 56. • Mr C jointly owned his home, which had a value of around £200,000 and no outstanding mortgage. • Mr C and his wife jointly held £10,000 in a deposit account. • Mr C held the following private pension provision: o £105,373 in a Group Stakeholder pension with Prudential. o Benefits in the defined benefit pension scheme in question, relating to nearly 21 years’ membership. The transfer value being offered by the scheme was £340,600. • Mrs C had defined contribution pension benefits with a value of £78,000.

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The suitability letter set out the following: “Your current needs and objectives Both your son and daughter would like to purchase a property but unfortunately do not have sufficient funds for the deposit. Having discussed this with [Mrs C] you would like to access the maximum tax-free cash from your deferred final salary pension and then gift it equally to your children to enable them to each purchase a property. You have therefore asked me to review your [DB] scheme and look at the viability of transferring the plan to a personal pension and withdrawing the tax-free cash. We discussed the possibility of either taking out a loan or remortgaging your property instead of drawing the funds from your pension. This was discounted as you want to retire at 60 and you do not want any debt when you do so. We also discussed why you wanted to take the benefits now, rather than waiting until you retired. You said that your son wanted to move into his own house and your daughter needed a larger property. You wanted them to own their own homes rather than renting and you wanted to help now, rather than wait. You also felt that the death benefits under the drawdown plan were better than receiving what is a relatively small guaranteed pension. It may be possible to access the funds from your and [Mrs C’s] current DC plans and access tax free cash of approximately £45,500 and we discussed taking this in preference to transferring the tax-free cash. You told me that you wanted to gift more than this and also you did not want to use [Mrs C’s] plan. Therefore, this was discounted. Your future income needs in retirement Whilst it is important to consider your current circumstances, we also need to establish what level of income you think you will need in retirement. We then need to consider how much the final salary scheme would have contributed to your income needs. As mentioned, you want to retire when you reach 60 and [Mrs C] will retire shortly after that. Your current joint expenditure is in the region of £3,200 per month and you have calculated that your joint expenditure when you retire will be around £24,000 per year. You currently live well, have four holidays per year and eat out regularly. You have two cars and therefore two lots of motoring expenses. When you retire, you will have a smaller house, only one car and do not intend to go on four holidays per year. Therefore, you will be able to reduce your expenditure. Of the £24,000 expenditure, you expect to contribute £19,000 net and Hayley £5,000. The role your Final Salary pension could have in meeting your future income needs The main advantage of receiving an income from a Final Salary scheme is that it is risk free and there is a promise that it will be payable for your whole life. The [DB] scheme has a retirement age of 65. At the age of 65, the scheme would have provided you with a pension of £19,156 or alternatively a tax-free lump sum of £94,093 and a reduced pension of £14,114.

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As you want to take tax-free cash now the scheme has provided details of the pension payable now. The [DB] scheme would provide you with a pension of £9,900 or alternatively a tax-free lump sum of £51,643 and a reduced pension of £7,746. As can be seen the pension scheme would not provide the level of cash that you would like, nor will it provide sufficient income when you retire. It is important to realise that this guaranteed income would have helped you in meeting your income shortfall. Your likely pattern of benefits in retirement Whilst there are benefits in having a reliable source of income, there are also advantages in having some flexibility. With the alternative Flexi Access Drawdown approach, there is the option to take more, or indeed less, than the prescribed and guaranteed amount that would have come from the scheme. We discussed both approaches, and you kindly gave me your views on which would better meet your needs, as follows. You require an immediate tax-free cash payment of £85,150 and no further payment until you retire at age 60. You estimate that you will need an income of £19,000 net per year when you retire. When you receive your state pension at age 67 you will reduce your drawdown amount by £8,797 per year. When Hayley receives her state pension this would also give you the ability to reduce the drawdown further but for the purposes of this report we have agreed not to do so.” In formulating its recommendation, Quilter carried out a transfer analysis on the transfer value of £340,600. This indicated that: • Mr C’s estimated benefits payable by the DB scheme if he took them immediately at age 56 was a pension of £9,900 a year or alternatively a tax free lump sum of £51,643 and a pension of £7,746 a year. The pension income would increase in line with inflation, was guaranteed for five years and would include a 50% spouse’s pension. • Mr C’s estimated revalued benefits payable by the DB scheme at the scheme retirement age of 65 was a pension of £19,156 a year or alternatively a tax free lump sum of £94,093 and a pension of £14,114 a year. The pension income would increase in line with inflation, was guaranteed for five years and would include a 50% spouse’s pension. • The transfer value comparator (“TVC”) showed that it would then cost £684,583 to buy an annuity on the open market to secure the same level of guaranteed income offered by the DB scheme from age 65. This compared with the transfer value of £340,600. The suitability letter set out the following: “Does the TVC analysis suggest that a transfer out should not be considered?

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If you wanted to take your pension benefits in exactly the same format as that being offered by the Final Salary scheme, then a transfer out would not be a good idea. It would be better to stay a member of the scheme and take the benefits at the normal retirement date. The transfer value is not high enough to replicate this level of income (with the same death benefits, escalation and spouse’s pension) by purchasing a similar annuity from the open market.” It also said: “Comparable annuity figures as of today If you were to buy an annuity today, you would be able to take 25% of the transfer value as tax free cash, which is £85,150. I have asked the scheme for an immediate early retirement quote for comparison. The scheme would have paid you £51,643 as tax free cash, if you retired today. (Note that the 25% tax free cash figure is higher than that which would have been paid by the scheme). If you took the income from the scheme today, this would have been £7,746 and this would have risen in line with inflation. Alternatively, with the remaining 75% of the fund you could have purchased a guaranteed annuity in a format which would be better tailored to your requirements. Based on current annuity data this would have been £8,748 per year, which is higher than that which would have been paid by the scheme. The annuity is based on a single life with no escalation and no spouse’s pension but with 100% value protection. This is an option that returns a lump sum if you die without having received the full value of the fund. A lump sum would be paid equivalent to the difference between the amount paid out and the purchase price of the annuity. As can be seen the scheme offers a lower amount of tax-free cash and pension.” The suitability letter also set out that there were several key elements to consider in relation to the transfer of DB benefits. The elements not already mentioned above which Quilter said were a reason in favour of a transfer included “The Death Benefits before, and after Retirement” and the following was said: • “If you were to die immediately, in other words whilst still a deferred member of the [DB] Scheme. • On death in deferment a pension of 50% of your pension at the date of leaving would be payable. • If you die within 5 years of retiring, the Trustees will pay a lump sum, equal to the value of the unpaid pension instalments for this period. Plus, a spouse’s pension of 50% of the value of your pension you were receiving at the date of death will be payable. • Following our conversations on how the death benefits compare, I would position this as being one reason in favour of a transfer.” The suitability letter also set out the following: “Sustainability and the risks of taking money out too quickly

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If you had kept your Final Salary scheme you would have been paid a guaranteed income for life, at retirement. After the transfer has been made however, this guarantee will be lost. In the new environment it will be possible for you to take large amounts out of your fund, without restrictions. This could mean that your pension pot could run out completely during your lifetime. You have indicated you may require an income of £19,000 net a year from age 60. Your current fund values total £340,600 from which you will take tax free cash of £85,150 and my initial fee of £10,218. I explained to you that taking a high level of income can deplete your funds very quickly. To help measure and explain this I have used a “Risk of Ruin” calculation tool. This has modelled how long your fund could last, based on your chosen income requirement assuming average investment conditions. For the purposes of this calculation I have included the balance of your current workplace pension of £105,373. You will withdraw £20,625 per year from the pension from age 60 until you are 67 when I have reduced the payment by the amount of the state pension (£8,797). The tool has calculated that at age 81 the fund will be £227,010 and will not run out during your lifetime. To help set this in context you need to consider that the most common age at death in the UK for men is 85 and for women it is 89, as explained earlier in this letter. (Source: ONS National Life Tables for the UK 2013 – 2015). Whilst this may be the most common age at death, there are many people who will live longer than this. We therefore include a 5-year buffer to help stress-test these figures. We therefore ask customers to consider age 90 to be more realistic for men, and age 94 for women.” Quilter assessed Mr C as having a ‘moderate risk” profile. It recommended that he invest the value of his PPP in the ‘Quilter Investors Moderate Blended Portfolio’ to align with his risk profile. The charges associated with Quilter’s recommendation and to be deducted from the Personal Pension fund value were as follows: • Initial advice charge of £10,218 payable to Quilter (which was 3% of the £340,600 transfer value); and • Ongoing annual charges based on the Personal Pension fund value: 1% for a Regular Review Service. Mr C sent his Quilter adviser an email on 27 April 2020 in which he said he wanted to proceed with the transfer. He also set out his capital requirements, which also included a need for money to fund major home renovations, and his understanding of the risks involved. The transfer to the PPP was completed in July 2020 and Mr C took 25% of the transferred funds as a tax free lump sum. In October 2024, Mr C made a complaint to Quilter through his representative about the advice and service he’d received from it. Quilter responded to the complaint in January 2025. In summary, Quilter didn’t uphold the complaint about the advice it had given Mr C and it said that it had provided annual reviews each year since.

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The matter was then referred to our service. The representative has also told us that Mr C retired in January 2025 on ill health grounds. Mr C had also started drawing an income from his pension in July 2025. The investigator had asked for Mr C’s comments on the email dated 27 April 2020 and he received the following in response: “From memory I can recall that I didn’t fully write it and that I was advised into what to say to get my pension although the circumstances are accurate from what I can remember. After speaking with Mr C he confirms that he wouldn’t have written an e-mail in that style and the adviser worded it for him.” Having considered the matter, our investigator thought that the complaint should be upheld, saying the following in summary: • In terms of the applicable rules, regulations and requirements at the time of the advice, the following applied: o PRIN 6: A firm must pay due regard to the interests of its customers and treat them fairly. o PRIN 7: A firm must pay due regard to the information needs of its clients, and communicate information to them in a way which is clear, fair and not misleading. o COBS 2.1.1R: A firm must act honestly, fairly and professionally in accordance with the best interests of its client (the client's best interests rule). o The provisions in COBS 9 which deal with the obligations when giving a personal recommendation and assessing suitability and the provisions in COBS 19 which specifically relate to a DB pension transfer. • The regulator, the Financial Conduct Authority (FCA), also said in COBS 19.1.6 that the starting assumption for a transfer from a DB scheme is that it is unsuitable. So, Quilter should have only considered a transfer if it could clearly demonstrate that the transfer was in Mr C’s best interests. • With regard to Mr C’s capacity for loss and level of reliance on the DB pension, the primary purpose of a pension was to meet the income needs of an individual during retirement. Mr C’s DB pension at the centre of this complaint accounted for nearly 21 years’ service. It was his most valuable asset by a significant margin at the time of the advice (his only other major assets of note being a 50% share of his main home valued at £200,000, and his Stakeholder pension with Prudential with a value of £105,373). • At the time of the advice, Mr C was 56 and planned to retire at 60. So he had limited time to build up further retirement provision through employed income bearing in mind his level of earnings and disposable income available every month. So it was fair to say that Mr C would be heavily reliant on his DB pension to meet his desired annual income need of £19,000 net at age 60. Further, to receive a net income of £19,000, an individual would need to receive gross income of around £22,000 pa. • As Quilter noted in its suitability letter, as it stood, the DB scheme wouldn’t provide the level of income Mr C wanted in retirement. But as Quilter also said, it was

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important to realise that this guaranteed income would have helped Mr C at least partially meet his income objectives. • So it was important that Mr C didn’t expose his DB pension benefits to unnecessary risks that could negatively impact his standard of living in retirement. All of these factors led to the conclusion that Mr C had limited capacity for loss. • In terms of Mr C’s capital needs, Mr C was 56 when Quilter advised him. The basis of the advice was that, by transferring to the PPP, it would enable him to immediately access the maximum tax-free lump sum available to meet several objectives and leave the residual fund invested in the PPP until he retired at age 60. Following the transfer, he withdrew the maximum tax-free lump sum available. • But in the advice process, it wasn’t specifically identified how much Mr C needed for his home renovations and how much he wanted to gift to his two children. Even if his capital objectives could only be met by accessing 25% of the offered transferred value from the DB scheme, it was difficult to see why it was suitable to lose guaranteed benefits to achieve these lump sum objectives. • It was recorded that the adviser discussed Mr C taking a loan or mortgage but this was discounted as he wanted to retire at age 60 and didn’t want any debt. But in light of the central importance of the DB benefits to his retirement provision, Quilter should have strongly encouraged Mr C to think carefully about what size lump sum he actually required and then explored with Mr C other ways of raising this money, for example by using his existing savings (including accessing his other pension), taking out a personal loan or mortgage or a combination of these options. Ultimately, it wasn’t reasonable for Quilter to have recommended that a transfer of the DB benefits was suitable for him. • Turning to the transfer analysis, the advice was given after the regulator gave instructions in Final Guidance FG17/9 as to how businesses could calculate future 'discount rates' in loss assessments where a complaint about a past pension transfer was being upheld. • The regulator's projection rates had also remained unchanged since 2014: the regulator's upper projection rate at the time was 8%, the middle projection rate 5%, and the lower projection rate 2%. The TVC showed that it would then cost £684,583 to buy an annuity on the open market to secure the same level of guaranteed income offered by the DB pension scheme from age 65. This compared with the transfer value of £340,600. This meant that the transfer value would need to grow by over 100% to match the scheme benefits. • Taking this into account, along with Mr C's attitude to risk and also the term to retirement, along with how his investments would be expected to grow, Mr C was likely to receive benefits of a materially lower overall value than the DB scheme at retirement as a result of the transfer and investing in line with his attitude to risk. • The comparison Quilter set out between the early retirement pension Mr C would receive from the DB scheme (£7,746) and the annuity he could receive from the open market (£8,748) was of limited use. As the suitability letter set out, the open market annuity was on a single life basis with no escalation whereas the DB scheme pension would increase in line with inflation, was guaranteed for five years and would include a 50% spouse’s pension.

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• In terms of Mr C’s death benefit objective, it was clear that lower risk suitable alternative options were available to achieve this. The suitability letter said that life cover was discussed with Mr C, but it was discounted as he didn’t want to commit to a monthly premium. But again, Quilter should have advised him that, as the objective in respect of death benefits could be met without putting his DBs at risk, it was another reason why transferring the DBs would be unsuitable. • The DB scheme provided death benefits – including a spouse’s pension. This could have been useful to Mr C’s wife in the event that he predeceased her. And these benefits were guaranteed and escalating – they weren’t dependent on investment performance, whereas the sum remaining on death in a personal pension was. And while the transfer figure would no doubt have appeared attractive as a potential lump sum, the amount remaining on death following a transfer was always likely to be different to that figure – unless Mr C had passed away immediately, which was unlikely. • As well as being dependent on investment performance, it would also have been reduced by any income Mr C drew in his lifetime. And given Mr C was recorded as generally being in good health, there was nothing to suggest that he was less likely to live until at least his average life expectancy. So, the fund could have been significantly depleted by the time it came to be passed on and may not have provided the legacy that Mr C may have thought. • Mr C wanted to retire from age 60. The TVAS report produced by Quilter showed that it was likely that the transferred funds wouldn’t run out in Mr C’s lifetime. But this relied on the accuracy of the assumptions in respect of his life expectancy and the growth his transferred funds would achieve. If he’d retained his benefits with the DB scheme, these risks would have remained with the DB scheme. • With regard to Mr C’s objectives for control and flexibility, this may have sounded attractive, but Mr C didn’t have any clear need for it. It wasn’t appropriate for an inexperienced investor to relinquish the guarantees attached to his main retirement provision in exchange for more risk so that he could access flexible benefits. And as already set out, it wasn’t suitable to lose guaranteed benefits to meet the lump sum objectives of gifting money to Mr C’s children and funding home renovations. • There was no real evidence that Mr C required the flexibility of variable income during retirement. But if he did require flexibility, then any flexible needs could have been met by the tax-free cash available under the DB scheme when he eventually took benefits at retirement. • As to taking control of his pension benefits, Mr C appeared to have been a largely passive pension saver up until that point. There was no evidence that he had experience of controlling, managing or investing large sums of money. • Mr C didn’t have sufficient knowledge and experience to enable him to understand the risks involved in transferring his main retirement provision. Transferring to the PPP led to the investment, inflation and longevity risks associated with his DB pension being transferred from the DB scheme to Mr C. Those risks would have been retained by the DB scheme, had he been advised to leave his benefits preserved in the scheme. There was no compelling reason for Mr C to take on those risks at that time.

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• In considering what would have happened if Quilter recommended that Mr C keep his benefits in the DB scheme (as it should have done), Mr C had said that the adviser worded the email of 27 April 2020 for him. But in any event, the email needed to be viewed in the context of the fact that Quilter had already recommended that a transfer of the DB scheme benefits was suitable. And, for the reasons given above, Quilter should have advised Mr C against doing this. • It was clear that Mr C was an inexperienced investor. With that and the overall circumstances in mind, if Quilter had provided Mr C with advice not to transfer his DB benefits, he would have followed that advice. As the professional expert, Quilter’s recommendation and advice would have carried significant weight and Mr C more than likely would have followed it. And if Mr C for whatever reason hadn’t followed advice to not transfer, then the regulator has set out guidance on the process to deal with such insistent clients. The investigator said that, in terms of putting things right, a fair and reasonable outcome would be for Quilter to put Mr C, as far as possible, into the position he would now be in but for the unsuitable advice. And he would have likely remained in the occupational scheme. He said that Quilter should do the following: Quilter should undertake a redress calculation in line with the rules for calculating redress for non-compliant pension transfer advice, as detailed in Policy Statement PS22/13 and set out in the regulator’s handbook in DISP App 4. Mr C had said that he retired in January 2025 on grounds of ill health. But he only started drawing an income in July 2025. So the investigator’s position was that, on balance, but for Quilter’s advice, he would have taken benefits from the DB scheme in July 2025. So the calculation should assume that Mr C took benefits from the DB scheme on that date, or the earliest point subsequently that he would have been permitted to. The investigator said that the calculation should be carried out using the most recent financial assumptions in line with PS22/13 and DISP App 4. In accordance with the regulator’s expectations, the calculation should be undertaken or submitted to an appropriate provider promptly following receipt of notification of Mr C’s acceptance. If the redress calculation demonstrated a loss, as explained in PS22/13 and set out in DISP App 4, Quilter should: • calculate and offer Mr C redress as a cash lump sum payment, and explain to Mr C before starting the redress calculation that: o redress will be calculated on the basis that it will be invested prudently (in line with the cautious investment return assumption used in the calculation), and o a straightforward way to invest the redress prudently is to use it to augment the current defined contribution pension • offer to calculate how much of any redress Mr C receives could be used to augment the pension rather than receiving it all as a cash lump sum, if Mr C accepts Quilter’s offer to calculate how much of the redress could be augmented, request the necessary information and not charge Mr C for the calculation, even if he ultimately decides not to have any of the redress augmented, and • take a prudent approach when calculating how much redress could be augmented,

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given the inherent uncertainty around Mr C’s end of year tax position. The investigator added that redress paid directly to Mr C as a cash lump sum in respect of a future loss would include compensation in respect of benefits that would otherwise have provided a taxable income. So, in line with DISP App 4.3.31G(3), Quilter may make a notional deduction to allow for income tax that would otherwise have been paid. Mr C’s likely income tax rate in retirement was presumed to be 20%. In line with DISP App 4.3.31G(1) this notional reduction may not be applied to any element of lost tax-free cash. The investigator invited Quilter to settle the complaint by offering to pay the full level of compensation owing to Mr C as a result of the recommendation for redress outlined above. The investigator said that he considered this to be fair compensation in this case. Alternatively, he said, Quilter may wish to make a different offer to settle the complaint. The terms of any offer made by Quilter would be put to Mr C for his consideration. If this case was settled earlier and the compensation came to more than £430,000, the business could do one of two things. It could pay the full amount, or it could make an alternative offer to settle the complaint. The terms of any other offer Quilter might make would be put to Mr C for his consideration. Quilter disagreed with the investigator’s assessment, however, saying the following in summary: • At the time of the advice, Mr C was 56, married and was approaching his planned retirement age of 60. He had two children, one of whom was renting a property with her partner and expecting her first child. The other was still living at home, saving for his first house deposit. • Mr C was extremely clear in his objectives that he was currently renovating his home with the plan of downsizing to a smaller property upon retirement. Mr C was also clear that he wanted to gift as much as possible to his two children to enable them to have sufficient deposits to buy their first homes, something he knew he couldn’t achieve by simply utilising the tax-free cash – this wasn’t sufficient to achieve this objective. • The investigator had said that Mr C would have relied heavily upon the scheme benefits to meet his desired annual income at age 60. However, the scheme retirement age was 65 and therefore his income need for £19,000 pa would have only been met by his plan five years post-retirement. He needed to take his retirement income before 65 and this was evidenced by him starting to take an income at 62 (in July 2025). As such the DB scheme didn’t meet his objectives for the level of income required, or his desired level of tax-free cash. • With regards to the comments about alternative ways for Mr C to raise the funds he required, for example using his savings, accessing his other pension, or taking out a loan and/or mortgage, upon transferring his pension Mr C took £85,150 in tax free cash and handwritten adviser case notes (provided) confirmed he wished to gift each child with £40,000 and the remaining £5,150 he would use for home improvements. It also confirmed he didn’t want to gift any proceeds from his house sale as, although he was downsizing, he potentially wouldn’t downsize in value.

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• Given the substantial amounts he gifted each child, it wasn’t reasonable that, at age 56, four years from retirement with modest earnings of £25,000 pa, he would have been able to borrow this amount, considering the income and expenditure documented. • In addition, his savings were also modest and a lump sum withdrawal of this size from his personal pension was likely to trigger a significant tax charge. Mr C’s desire to help his children lay a financial foundation upon which to build outweighed his need to receive his target guaranteed income five years post-retirement. He also had his own goals of moving home and downsizing, something he couldn’t achieve with his eldest son still living at home. • Given that the DB scheme didn’t provide his target income at his planned retirement age or enable him to provide his children with sufficient house deposits which in turn meant he could continue with his plans to downsize, he was prepared to accept the risks associated with transferring this scheme as it was the only way to meet his objectives. • Mr C confirmed in his email dated 27 April 2020 his reasons for the transfer and he understood the guarantees he was relinquishing. Although Mr C had confirmed via his representative that he had help with the wording of the email, he did also confirm that the circumstances surrounding the transfer were correct. • Overall, Mr C gave up the guaranteed benefits to a plan which provided him with his target income five years post-retirement and didn’t provide him sufficient tax-free cash to meet his overriding personal family objectives. Following the transfer, Mr C achieved his objectives of providing his children with house deposits, he finished renovating his home and downsized to a house of the same value in June 2024. He also commenced his retirement income in July 2025 at 62. • As this wouldn’t have been possible without transferring his DB scheme, Quilter said that it couldn’t accept the view that the pension transfer was unsuitable. As agreement wasn’t reached on the matter, it was referred to me for review. I issued a provisional decision on the complaint on 11 March 2026, in which I set out my reasons for not upholding it. The following is an extract from that decision. “I’ve considered all the available evidence and arguments to decide what’s fair and reasonable in the circumstances of this complaint. And having done so, I’ve reached different conclusions to those set out by the investigator. I’ll explain why below. When considering what’s fair and reasonable, and in accordance with the Financial Services and Markets Act 2000 (FSMA) and DISP, I need to take into account relevant: law and regulations; regulators’ rules, guidance and standards, and codes of practice; and, where appropriate, what I consider to have been good industry practice at the time. The applicable guidance, rules, regulations and requirements This isn’t a comprehensive list of the guidance, rules and regulations which applied in 2020, but provides useful context for my assessment of the business' actions here.

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Within the FCA’s handbook, COBS 2.1.1R required a regulated business to “act honestly, fairly and professionally in accordance with the best interests of its client”. The FCA’s suitability rules and guidance that applied at the time Quilter advised Mr C were set out in COBS 9. The purpose of the rules and guidance is to ensure that regulated businesses, like Quilter, take reasonable steps to provide advice that is suitable for its clients’ needs and to ensure they’re not inappropriately exposed to a level of risk beyond their investment objective and risk profile. In order to ensure this was the case, Quilter needed to gather the necessary information for it to be confident that its advice met Mr C’s objectives and that it was suitable. Broadly speaking, there were requirement for a regulated advisory business to undertake a “fact find” process. There were also specific requirements and guidance relating to transfers from defined benefit schemes – these were contained in COBS 19.1. COBS 19.1.1C R required the following: (1) “A firm must make a personal recommendation when it provides advice on conversion or transfer of pension benefits. (2) Before making the personal recommendation the firm must: (a) determine the proposed arrangement with flexible benefits to which the retail client would move; and (b) carry out the appropriate pension transfer analysis and produce the transfer value comparator. (3) The requirement in (2)(b) does not apply if the only safeguarded benefit involved is a guaranteed annuity rate. (4) The firm must take reasonable steps to ensure that the retail client understands how the key outcomes from the appropriate pension transfer analysis and the transfer value comparator contribute towards the personal recommendation.” Under the heading “Guidance on assessing suitability”, COBS 19.1.6 set out the following: “When a firm is making a personal recommendation for a retail client who is, or is eligible to be, a member of a pension scheme with safeguarded benefits and who is considering whether to transfer, convert or opt-out, a firm should start by assuming that a transfer, conversion or opt-out will not be suitable.” And “A firm should only consider a transfer, conversion or opt-out to be suitable if it can clearly demonstrate, on contemporary evidence, that the transfer, conversion or opt-out is in the retail client’s best interests.” And COBS 19.1.8 set out that: “If a firm provides a suitability report to a retail client in accordance with COBS 9.4.1R it should include:

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(1) a summary of the advantages and disadvantages of its personal recommendation; (2) an analysis of the financial implications (if the recommendation is to opt-out); (2A) a summary of the key outcomes from the appropriate pension transfer analysis (if the recommendation is to transfer or convert); and (3) a summary of any other material information.” I’ve therefore considered the suitability of Quilter’s advice to Mr C in the context of the above requirements and guidance, and would comment as follows. Firstly, in terms of financial viability, it’s fair to say that, as with the investigator, the DB pension was Mr C’s most valuable asset, and accounted for 21 years of his pension accrual. And as illustrated by the TVC, to replace the income which was being relinquished, it would cost £684,583, compared to the £340,600 CETV being offered. On the face of it, therefore, if Mr C was seeking to simply duplicate the format of the benefits which would be provided by the DB scheme, the transfer would seem to have been poor value. But Mr C wasn’t in this instance seeking to duplicate those scheme benefits, and it had been set out quite clearly in the report that a transfer wouldn’t realistically be able to achieve that. And given Mr C’s own comments (as set out below), I think it’s reasonable to conclude that he would have been aware of this. Nevertheless, and irrespective of Mr C’s awareness of the valuable guarantees he was relinquishing, Quilter needed to provide a suitable recommendation. And as set out above, the starting point needed to be that a transfer wouldn’t be suitable. And so I’ve carefully considered Mr C’s stated objectives, and how these might have been, and indeed to what extent were, achieved. In doing so, I’ve firstly noted that Mr C approached Quilter for information relating to his pension, rather than being, for example, cold called and being advised to transfer. Mr C then set out quite a specific set of objectives, the most notable of which was to gift money to his children to enable them to buy their own homes, and help them in other ways. As noted above, one of Mr and Mrs C’s adult children lived with them, and so helping them buy their own homes would be an entirely understandable, and perhaps time-focussed, objective. I think it’s also worth setting out the wording of the email from Mr C, which, whilst he’s said he had assistance in drafting, would have been readily understandable - and I note that Mr C has himself acknowledged that it was factually correct: “I am pleased to confirm that I have read the recommendation report dated 23 April fully, and I can also confirm that it is an accurate, and good, appreciation of my circumstances and needs. I have no further questions I wish to ask before we proceed with the transfer. I am also fully aware that I shall be giving up a guaranteed level of income, expected to be £19,156 per annum at the age of 65 by transferring out of the [DB] pension scheme. I appreciate this figure would increase in line with inflation each year. I have given this matter lengthy consideration, having fully weighed up the pros and cons, and totally understand the risks which have been outlined to me. I consider myself to be financially aware and require the 25% lump sum to meet some impending capital

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expenditure to support my family. My daughter, [daughter’s name], has recently had her first baby. She is currently living in rented accommodation and I would like to be in a position to help her get onto the property ladder as she is unable fund the deposit she needs. She is also planning a wedding to her partner [partner’s name] and this is also an occasion I wish to pay for so they don’t start out their married life in debt. My son [son’s name] is also saving for a deposit on his first house so this transfer of money would enable me to help both of my children purchase homes of their own. Both of my children also have debt from University which I would like to help them with if possible. I am also currently embarking on major renovations to my home with a view to then selling the property and downsizing. This money would help fund this work and also help with the costs associated with purchasing a new home which may be higher in value than our current home. I feel that my pension fund would be the most practical way to meet these impending costs. I also appreciate that this withdrawal would reduce my fund for any potential retirement income. However, I believe my outgoings are fairly modest and would be more than met by my basic state pension, and the remaining pension pot when it came to that point, along with that of my wife.” As it was, following the transfer, Mr C gifted his daughter £42,904 and his son £6,000. Mr C invested a further £85,000 in bonds. But on the basis of the quite specific objectives set out above, and which Mr C has himself said were accurate at the time, I think that Quilter would have been entitled to accept the above as a statement of Mr C’s intent. Further, even if Mr C had been assisted in drafting the email, I think the content ought to have been readily understandable. I’ve then considered the ways in which Mr C might realistically have achieved those objectives. If Mr C took immediate benefits from the DB scheme, this would have provided a tax free lump sum of £51,643 and a residual annual income of £7,746. This would have met the requirement for the gifts to his children as are now known, but as set out above, Mr C’s ambitions as set out to Quilter - £40,000 to each child and the remaining £5,000 for house renovations - went beyond this. And in terms of the income which Mr C would receive, this wouldn’t have met Mr C’s anticipated income requirement of £19,000 pa net at age 60, in four years’ time. The plan as set out to Mr C was that, at age 60 (although I note that Mr C actually retired at age 62), he would begin to access the required income by drawdown and then this would reduce by the amount of the state pension at age 67. On the basis of Quilter’s “Risk of ruin” report, it was predicted that the planned income withdrawals would be sustainable and, that by age 81, the pension fund would be £227,010. Quilter therefore concluded that Mr C wouldn’t run out of pension funds within his lifetime. Overall, therefore, although the transfer wouldn’t have been able to replicate the guaranteed benefits provided by the DB scheme, it did nevertheless seem to meet Mr C’s clearly stated objectives, which couldn’t have been met by retaining the DB scheme benefits, and provided a credible and realistic basis upon which he’d be able to withdraw the required income from age 60 (or 62 as it turned out) for the rest of his life.

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As such, I’m currently of the view that the transfer of benefits was suitable for Mr C and his stated requirements.” Quilter accepted my provisional findings. Mr C’s representative didn’t respond. 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. As no further comments have been received from either party, I see no reason to depart from my provisional findings, and my reasoning remains the same. My final decision My final decision is that I don’t uphold the complaint. Under the rules of the Financial Ombudsman Service, I’m required to ask Mr C to accept or reject my decision before 23 April 2026. Philip Miller Ombudsman

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