The Financial Ombudsman Service told SJP to pay the complainant, known simply as Mrs S, £150 for “the trouble and upset she has suffered in trying to get to the bottom of what happened to her pension caused by its advice”.

Her complaint arose from advice on starting a new personal pension plan. 

Mrs S claimed she “was misled about the tax benefits of paying into the plan and that she couldn’t afford the contributions” and that “she should have been advised to resume contributions to an existing PPP”.

Mrs S, in her mid-30s, initially lodged a complaint with SJP in April 2015 before taking the case to the FOS.

She said the advice was “poorly given and the PPP wasn’t properly explained”.

SJP rejected her complaint, saying:

· The plan payments were affordable as it was recorded she had sufficient disposable income which had recently increased.

· The illustration showed the tax position and the plan charges.

· Her tax had in reality reduced as the tax relief was reclaimed on her behalf.

Originally, Mrs S, who earned about £40,000 per year on a self-employed basis, met with an SJP adviser for mortgage advice in June 2012. During the conversation, she expressed concern about her income tax bill, as she was self-employed. Mrs S, who was recorded as having medium attitude to risk, said the adviser suggested to her that paying into a pension would help her reduce it.

A report set out in clear terms the contributions Mrs S would be making and the impact this would have on her disposable income of £250 per month, the FOS said.

An FOS adjudicator investigated the complaint and concluded that “there wasn’t any evidence within the paperwork that would’ve misled Mrs S about the tax treatment of her pension payments”.

The FOS report stated: “Mrs S had continued the net monthly payments of £250 per month which inferred that there was no affordability issue. This level of payment was within the disposable income recorded at the time of advice.

“But the adjudicator also concluded that a stakeholder plan could have achieved her objectives as she didn’t need a complex investment strategy with higher charges. Mrs S wasn’t an experienced or sophisticated investor.

“The adviser should’ve looked at her existing PPP and the investment options. Had he done so, he would’ve noted the lower charges and the wide investment fund range (the existing provider offered 15 external funds too).”

The adjudicator asked SJP to work out whether Mrs S had suffered a financial loss by paying into the new PPP instead of into her existing plan and pay the difference to her and asked it to pay £150 for her “trouble and upset”.

But SJP didn’t agree, saying the adviser wasn’t allowed to advise on Mrs S’s existing plan. SJP said as an appointed representative (AR) he could only advise on SJP products.

The firm said Mrs S would have been aware of this as it had advised her in 2009 and it was set out in the documents provided to her in 2012.

It added that Mrs S had rejected the stakeholder option. SJP said it had undertaken a loss comparison with the proposed index, which demonstrated Mrs S hadn’t actually suffered any loss.

As both parties disagreed on aspects of the adjudicator’s view, the complaint was passed to ombudsman Benjamin Taylor. He largely agreed with the adjudicator’s original view.

He said: “While the SJP advisor was only able to give restricted advice in relation to products available through SJP, he was aware that Mrs S had an existing PPP at the time of advice. The restrictions placed upon him by SJP meant he couldn’t advise Mrs S to re-start her contributions with her original PPP.

“But that didn’t mean he couldn’t seek to understand the existing plan, including the funds and fees involved, in getting to know his client properly. Armed with that information he would be able to say whether an SJP product would be better for Mrs S or not.

“The conclusion should have been a new plan with SJP wasn’t suitable for Mrs S. So even if the advisor couldn’t tell Mrs S to re-start her contributions (which he would have found out she was able to do), he could suggest she speak to her PPP plan provider herself or speak to an advisor who could give that advice. Simply because she was in front of him, originally for mortgage advice, didn’t mean she had to buy an SJP product.

“I accept Mrs S’s explanation as to how she was steered away from the SJP stakeholder plan and I don’t think the suitability letter reflected Mrs S’s genuine position. I see no reason by why she wanted the particular funds being proposed. She has said that she didn’t have any need for it.”

He added: “However, while I don’t think Mrs S got suitable advice, I’m satisfied that Mrs S hasn’t suffered any loss as a result.”