Bellpenny has been told it was “unfair” to take charges from a client whose adviser it purchased.
Bellpenny has been told to refund the charges paid to it from a couple’s investments, after subtracting an amount to cover the costs of its administrative work.
The IFA consolidator has also been told to pay the couple £150 for “the trouble it has caused.”
The couple, referred to as Mr and Mrs T, complained about the charges Capital Professional Limited (trading as Bellpenny) took from their investments after the consolidator took over the pair’s previous adviser’s business in May 2015.
A letter from the client’s old adviser stated: “With regard to charges, I would propose an initial fee of 0.5 per cent to cover the cost of the initial advice and implementation of the scheme followed by an annual charge of 0.5 per cent, which would cover quarterly valuations, investment reviews and any necessary administration associated with the servicing of the portfolios…”
Mr and Mrs T had been paying charges to their old adviser direct from their investments.
These charges were then transferred to Bellpenny.
It was in January 2016, Mr and Mrs T complained about the charges.
They said after an initial meeting, they had decided not to sign up with Bellpenny and they hadn’t signed the client agreement.
As a result, they argued they shouldn’t have been charged.
Bellpenny argued the regulator’s rules about taking over another business’ clients allowed it to carry on getting trail commission and that it had told Mr and Mrs T several times that the charges would continue.
But Mr T said at no stage did any of the Bellpenny advisers tell him that charges would continue to be paid.
He said the letter from his previous adviser said service agreements wouldn’t be automatically transferred.
In a final decision, ombudsman Louise Bardell said Bellpenny’s Q&A document failed to make it clear that the charges would continue.
Plus, Ms Bardell said Mr and Mrs T’s old adviser’s letter had told them that “your existing service arrangements with TOR FA Ltd will not automatically continue with Bellpenny”.
Ms Bardell said: “I don’t think there’s any doubt that it wasn’t providing all the services for which the charges were originally put in place.
“I don’t think it would be reasonable to expect Mr and Mrs T to pay the same charges for a far more limited service, without being given a clear opportunity to agree to the charges continuing.”
