Financial advisor’s error has been costly for us - can we complain?

Maria61

In 2022 We needed to employ a financial advisor when my husband retired and moved his private pension out - we really don’t know a lot about tax and allowances so felt he would be the right person to keep us informed and on track
whilst taking a monthly income from the private pension, last year we also asked him if we could take a one off lump sum he advised we could and he would also send a form P55 to hrmc advising this is a one off payment and that we would not be going over 50k that year.
hrmc replied to say our financial advisor did not take into account the state pension which is taxable income and this pushed us into the 40% tax band with immediate effect and we received a tax bill of £2616.
we showed him the letter from hmrc he admitted he had made the error but we got no apology he just worked out a payment plan to reduce the private pension considerably per month as now we’re paying 40% tax.
I feel so angry that this has happened and we were not made aware of the consequences simply because he forgot yet we have to pay the price.
We are still with the financial advisor’s company but have changed advisor
I wondered about writing a letter of complaint to his company and depending on their reply perhaps the ombudsman do you think we have a case for complaint and compensation?

Albermarle

For sure I would write a letter of complaint, but I would not hold out any great hope of them compensating you with the £2616.
Maybe you could ask for a refund of some of the fees as a gesture of goodwill.
I don’t think the ombudsman is going to be interested in what was a simple human error.

Grumpy_chap

A FA (or IFA) is not an Accountant.  Accountants deal with tax.

Is the total £2.6k income tax attached to the pension drawdown?  If so, only half of that is because of the error / omission.  If income was below £50k, you would still have been liable for 20% income tax so £1.3k

Hoenir

Did you inform the advisor that your husband's situation had changed and that he had commenced drawing the state pension or simply asked about withdrawing a lump sum?  

Marcon

Maria61 said:

In 2022 We needed to employ a financial advisor when my husband retired and moved his private pension out - we really don’t know a lot about tax and allowances so felt he would be the right person to keep us informed and on track
whilst taking a monthly income from the private pension, last year we also asked him if we could take a one off lump sum he advised we could and he would also send a form P55 to hrmc advising this is a one off payment and that we would not be going over 50k that year.
hrmc replied to say our financial advisor did not take into account the state pension which is taxable income and this pushed us into the 40% tax band with immediate effect and we received a tax bill of £2616.
we showed him the letter from hmrc he admitted he had made the error but we got no apology he just worked out a payment plan to reduce the private pension considerably per month as now we’re paying 40% tax.
I feel so angry that this has happened and we were not made aware of the consequences simply because he forgot yet we have to pay the price.
We are still with the financial advisor’s company but have changed advisor
I wondered about writing a letter of complaint to his company and depending on their reply perhaps the ombudsman do you think we have a case for complaint and compensation?

If someone admits they've made a mistake, the very least they can do is apologise - something which is often hampered, or quite simply precluded, by an insurer's requirements.

You say you are angry and I can understand why. Write and complain; simply fuming in silence, or posting here, gives the firm no chance to do anything to remedy matters. They aren't mind readers, so you can't rely on that very human assumption that 'they must have realised I was upset'.  The error was both foreseeable and avoidable, and is such a basic 'tax' matter that it would be well within the adviser's remit - your post confirms they were thinking in 'tax terms' when you referred to the fact the adviser said he would submit a P55. That assumes, of course, that you would not have drawn down so much from the private pension had you know the tax impact?

dunstonh

whilst taking a monthly income from the private pension, last year we also asked him if we could take a one off lump sum he advised we could and he would also send a form P55 to hrmc advising this is a one off payment and that we would not be going over 50k that year.

Who chose the amount of the lump sum?
Was the lump sum taken under the advice service or did they just facilitate your request?  

If under advice, then it was a mistake.  If it was facilitating an instruction rather than advice, then it's not.

Before you complain, go to the firm first and speak it through with them.  A complaint can cost several thousand to administer, even on rejected complaints.   The firm may well offer a goodwill gesture as the lower cost option to avoid the complaint and costs that go with it.

Ibrahim5

How awful. Advisers cost so much in many different ways. How much did they charge you in fees that year? They should refund the money.