The complainant, known as Mr M, sought redress after AJ Bell failed to notify him that the interest rate for his instant access account with the Royal Bank of Scotland was cut and would later fall to zero.
Mr M is a beneficiary of a Sipp operated by AJ Bell Investcentre, formerly Sippdeal Trustees.
A deposit of £118,000 was made in July 2015 when the instant access account carried an interest rate of 0.8%. This compares with the Bank of England base rate of 0.3%.
In August 2015, Mr M opened a separate account with Hodge Bank which offered an interest rate of 1.75%.
0% interest
AJ Bell received a letter from RBS in late August 2015 to confirm that the interest rate would drop to 0.1% until February 2016, after which it was be 0%. The accounts affected were identified by sort code.
AJ Bell’s standard timescale for dealing with new items of post is five working days.
Five months later, the firm contacted RBS for further details. It did not receive a reply.
In the interim, the investment platform failed to notify Mr M or his adviser of the changes to the interest rate.
In August 2016, the Bank of England base rate was cut to 0.25%.
At this time, Mr M’s adviser said she reviewed the market and advised against moving his funds out of the RBS account on the understanding that the interest rate had reduced to 0.55%.
However, when her firm contacted RBS, the bank confirmed that it was 0%.
Account closure
The following month, Mr M instructed AJ Bell to close his account and transfer his funds to two bank accounts held at Metro Bank and Carter Allen bank.
What followed was various correspondence between the financial adviser and AJ Bell about delays in informing Mr M of the interest rate changes, delays to closing the instant access account and the subsequent financial loss.
Mr M and his adviser argued that, had he been informed of the interest rate change in August 2015, he would have transferred his funds to Hodge Bank.
AJ Bell conducted an investigation but found that, while accepting it failed to notify Mr M of the interest rate changes, it did not agree that it is to blame for what had gone wrong.
It declined to pay the requested compensation of £500 as it would be disproportionate to the level of non-financial injustice Mr M would likely have suffered.
AJ Bell added that it is company policy not to pay compensation to intermediaries.
Decisions
An adjudicator at the Pensions Ombudsman found in favour of Mr M, stating that RBS gave sufficient information to AJ Bell in August 2015 for the investment platform to identify and notify affected customers within five working days.
By contacting RBS five months later, the adjudicator stated that AJ Bell acknowledged that it had an obligation to act on the information and, as a result, is to blame for any financial loss Mr M suffered.
The adjudicator did not, however, agree that AJ Bell took too long to close the account once the instruction was received in 2016.
Compensation of £500 was found to be in line with what the Pensions Ombudsman would direct in similar cases.
AJ Bell disagreed, and the case was passed to an ombudsman.
Ombudsman Karen Johnston concurred with the adjudicator and directed AJ Bell to compensate Mr M for any loss of interest, notify him in writing of the amount and pay £500 for “significant distress and inconvenience”.
