John Meadley could have been deprived of £42,000 in pension income had his financial adviser, Miles Hendy, not challenged a statement by provider Friends Provident.
Last year, Hendy
requested a transfer value for Meadley’s with-profits annuity, which differs from most with-profits pension policies in that annual bonuses are added to guaranteed income, rather than the guaranteed fund value.
Friends projected a guaranteed annuity of £1,100 at the age of 70 for Meadley, currently aged 68. But Hendy spotted that essential information about bonus guarantees had not been included in the statement.
“It looked like he was guaranteed an income of only £1,100 when he is actually guaranteed an income of £6,600 per year,” says Hendy.
“My client could have been put at serious financial disadvantage. Had I assessed the policy as a new client without the background knowledge, I would have recommended that he consider transferring the fund and losing what I estimate to be £42,000-worth of guarantees.”
What also concerned Hendy was that he had telephoned Friends in 2008 and alerted it to its misleading statements, but this was not acted on until he lodged a formal complaint two years later.
“I wrote to Friends chief executive, Trevor Matthews, in 2010 asking him to immediately review everyone who had transferred out during the period [from when bonus information was removed] and provide them with the correct details of their policy and asking them if they wanted to reinstate,” says Hendy. “This would have been the decent thing to do, but they declined to do this.
“I wonder how many people decided to transfer out on this incomplete information and lost out on thousands of pounds?”
Meanwhile, John Meadley, says he was disheartened that Friends had not been more upfront with its customers.
“As a Quaker, I find it disappointing that a company started by Quakers (Friends) in 1832, and which succeeded because of its transparency and fairness, should now choose to be opaque in its relationships with its customers”.