A FOS decision notice revealed the client, Mr B, had complained after the proposed transfer of his pension plan to a qualifying recognised overseas pension scheme (QROPS) became subject to the overseas transfer charge, even though he made the request before the charge came into effect.

On 16 February 2017 Scottish Widows received a request for the transfer of Mr B’s pension plan to a QROPS.

The firm wrote to Mr B on 2 March 2017 to explain that it required additional documents completed to process the transfer.

New legislation came in to effect on 9 March 2017 that meant transfers to QROPS requested on or after this date would be taxed at a rate of 25% - subject to various exclusions.

This is known as the overseas transfer charge.

Scottish Widows received documents from the receiving scheme on 5 April 2017.

These were signed and dated 12 and 29 March 2017.

Scottish Widows emailed the receiving scheme on 7 and 26 April 2017 explaining HMRC’s APSSS263 document had been revised as of 9 March 2017.

They said they needed this new document to be completed to allow them to proceed with the transfer.

Mr B’s adviser subsequently contacted Scottish Widows about the transfer.

He was unhappy that they were requesting the completion of HMRC’s new form as this could result in potentially higher charges – the overseas transfer charge – for Mr B.

A complaint was registered at this point.

Scottish Widows did not uphold the complaint and said, after receiving the transfer request on 16 February 2017, there was not enough time for them to carry out their due diligence checks and receive the correct paperwork before the deadline of 9 March 2017.

And so, as they had not received all the required paperwork by this point, they had to adhere to the legislation in place when all of their requirements would be met.

The FOS report read: “The complaint was referred to our service.

“One of our investigators looked in to the matter but he didn’t think the overseas transfer charge should be applied.

“He said the request was made before 9 March 2017 and that the guidance published by HMRC, in respect of transfers to QROPS, made it clear that these weren’t subject to the charge.

“And that the guidance doesn’t suggest it should be applied as a result of Scottish Widows’ requirements not being met by 9 March 2017.

“Mr B’s pension plan wasn’t transferred and he told us that this was as a result of the dispute about the 25% charge.

“Our investigator thought that had it not been for him being wrongly told that the charge would be applied, the transfer would’ve gone ahead.

“So he recommended that Scottish Widows cover the cost of the overseas transfer charge (if it applied).

“He also thought £100 should be paid to Mr B for the inconvenience this matter had caused him.”