Bodhi transferred his UK pension to a fund manager in New Zealand. Before the transfer, Bodhi took advice from an adviser that worked for the fund manager.
The adviser recommended that Bodhi’s funds should initially be allocated between income and growth investments in similar allocations to how Bodhi had his funds invested in the UK. This meant a larger allocation to income investments than growth investments.
The adviser went on to recommend that the funds should progressively be moved from income to growth investments. Bodhi had an aggressive risk profile and preferred growth investments.
Bodhi accepted the recommendation, and his pension was transferred in 2019. The funds were invested in accordance with the initial recommended allocations. The fund manager did not move Bodhi’s funds to growth investments over time or contact Bodhi about this.
In September 2021, Bodhi contacted the fund manager about his allocations. At Bodhi’s request, the fund manager moved his funds into growth investments. Bodhi explained that he had recently discovered his funds were still weighted towards income investments, which was not what he wanted when he transferred his pension.
Bodhi subsequently complained to the fund manager. The fund manager believed they had not done anything wrong because Bodhi had not instructed them to switch his funds to growth investments until September 2021. As a goodwill gesture, the fund manager gave Bodhi a fee rebate for the next year, and following that, they would discount their fees.
Bodhi was not satisfied with the fund manager’s response and complained to FSCL.
Bodhi said he made it clear to the fund manager, from the outset, that he wanted his funds placed in growth investments.
Bodhi estimated that his loss was around $60,000. He had experienced lower investment returns and, when his funds were eventually transferred to growth investments, he bought at the ‘top of the market’.
The fund manager believed they were not contractually required, or legally obligated, to move Bodhi’s funds to growth investments after the pension transfer. Bodhi had not wanted them to provide ongoing advice, and the fund manager did not have authority to make changes to Bodhi’s investment without his written instructions.
The fund manager also believed Bodhi knew, or ought to have known, his investment allocations before September 2021. They were in reports the fund manager sent him and were available on their app.
Bodhi confirmed he received the reports and used the app but said he had only looked at fund values. He did not look at his investment allocations.
We concluded that the recommendation Bodhi accepted included the plan to move his funds, over time, from income to growth investments. While, in practice, Bodhi’s investments could only be changed if he completed a switch form, to instruct the fund manager, they had not told Bodhi he needed to complete the forms.
However, it was not fair to expect the fund manager to compensate Bodhi. We also concluded that Bodhi probably knew soon after the first reallocation was due under the adviser’s recommendation, in April 2020, that his investment allocations had not changed.
During our investigation, the fund manager obtained data about Bodhi’s use of their app. The data showed Bodhi had used the app many times from January 2020 onwards, including the investment allocations page.
On balance, we concluded that Bodhi had probably regularly looked at his allocations. It seemed unlikely Bodhi would have suddenly stopped accessing the investment allocation information on the app.
We recommended that Bodhi discontinue his complaint.
Insights for consumers and participants
When deciding whether compensation should be paid to a consumer, we must decide what is fair in all the circumstances of the complaint.
The fact a scheme member did something wrong, such as breaching their contract with the consumer, does not in itself mean we will award compensation. We only do this if we are satisfied the scheme member directly caused the consumer a financial loss and/or non-financial loss (such as stress), and that compensation is fair. When deciding what is fair, we may need to consider whether the consumer also caused, or contributed to, the loss complained about, or failed to take steps to prevent or reduce the loss occurring.