Financial Administration Services Limited · DRN-6154327

The complaint Mr F complains that Financial Administration Services Limited (Fidelity) failed to pay the maximum amount of tax-free cash from his pension because an exemption certificate wasn’t in place, without confirming this first. He wants compensation for the tax liability that will now be incurred in withdrawing the funds from his pension, which he says would be around £55,000. What happened Mr D had a personal pension plan with Fidelity and was advised about this by his IFA, Chase de Vere (CDV). He met with CDV on 2 June 2025 and discussed drawing his remaining tax- free lump sum allowance (TFC). CDV generated an illustration from Fidelity’s system showing TFC of £155,403.55 (being 25% of the total fund value) on 6 June 2025. The balance of Mr F’s fund would go into income drawdown. The rules around maximum pension benefits are complex. Following changes in April 2024, the maximum amount of TFC is limited to £268,275 (the lump sum allowance), unless someone has a potentially higher allowance through having some form of Lifetime Allowance protection, of which there are several types. Mr F had taken other pension benefits in 2010 and elected for Fixed Protection 2014. But under the new rules from April 2024, it was also necessary for Mr F to obtain a Transitional Tax-free Amount Certificate (TTFAC) before taking any further benefits. A TTFAC request is made to the pension provider and HMRC regulations allow the provider up to three months to consider the application before either granting or rejecting the request. CDV attempted to submit an TTFAC application to Fidelity on 17 June 2025, by email with supporting documents. There was some uncertainty about what happened here, with Fidelity subsequently saying it had never received the email. It transpired, due to the size of the files attached, CDV’s system had blocked the email being sent to Fidelity. On 30 June 2025, also directly through Fidelity’s system, CDV submitted a request to fully crystallise Mr F’s plan to take maximum TFC. As Mr F was over age 75, Fidelity picked this up for manual processing and on 2 July 2025 it asked CDV to provide details of his previous pension benefits. The next day CDV confirmed that Mr F had already used 87.46% of his lump sum allowance. Fidelity ran calculations as it was required to do, which showed the maximum TFC sum available was £33,641.68, being the remaining 12.54% of the maximum lump sum allowance of £268,275, this was processed and paid on 5 July 2025. On 7 July 2025 CDV queried why only £33,641.68 was paid rather than £155,403.65. On 18 July 2025 Fidelity confirmed it’s calculations. CDV said it had submitted the TTFAC application on 17 June 2025. Fidelity said it hadn’t received this and there were some exchanges about this. Fidelity said it had followed its processes correctly. CDV then raised a formal complaint which Fidelity didn’t accept. It said it hadn’t made any errors in its process as it hadn’t received the TTFAC application and this hadn’t been mentioned by CDV when it was asked to provide details of Mr F’s previous pension benefit crystallisations. Fidelity said as the rules required a TTFAC to be applied for before any further payment of benefits, it was now too late to make the application. And it said HMRC rules meant it wasn’t possible to cancel the TFC payment. The consequence of this was that Mr F would be taxed at his

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marginal rate of income tax if he withdrew the difference of £121,761.97 between the potential TFC and the amount actually paid. Mr F referred his complaint to our service and our investigator looked into it, but he didn’t uphold it. Our investigator said Fidelity wasn’t offering Mr F financial advice, instead it administered the plan on the basis of instructions received from CDV. He said it wasn’t Fidelity’s role to question these instructions. He said CDV had generated the illustration from Fidelity’s system, and it wouldn’t be aware of any potential tax exemptions. He said CDV’s email of 17 June 2025 hadn’t been sent and in submitting the claim form on 30 June 2025, it answered a question about whether Mr F had any transitional protections - “No”. And when Fidelity had asked for further details, CDV hadn’t mentioned the TTFAC application. He said the information Fidelity had been provided with was insufficient for it to question the request it had received, particularly as a professional adviser was involved. Our investigator said CDV had also queried why the documents sent to Mr F referred to a cancellation period of 30 days, during which time he could change his mind. But then Fidelity said HMRC had published guidance that cancellation rights did not apply to taking TFC, so it wasn’t possible to reverse the decision. Our investigator agreed this HMRC guidance had overridden anything contained in Fidelity’s documents. And, in any case, CDV hadn’t queried this until 10 September 2025, which was more than 30 days after the TFC had been paid, meaning had there been cancellation rights, these would have expired by then anyway. And he said there was no evidence CDV would have done anything differently had the cancellation period not been referred to in the documents. Fidelity said it was updating its literature to reflect HMRC’s position in this area. Mr F didn’t agree. He said he considered Fidelity had been “high handed” as it had requested some information about his benefits but not the TTFAC, which hadn’t been provided due to a technical glitch. He said Fidelity should have queried the “major discrepancy” between the TFC amount requested on the illustration and the figure it had calculated. As Mr F doesn’t agree it has come to me to decide. What I’ve decided – and why I’ve considered all the available evidence and arguments to decide what’s fair and reasonable in the circumstances of this complaint. Having done so, I’m not upholding the complaint. I sympathise with Mr F’s position, but I don’t think Fidelity has treated him unfairly. It wasn’t providing Mr F with advice, and its role was to administer the pension in line with HMRC rules and the instructions it received, either from Mr F or in this case, his appointed adviser. And I think Fidelity correctly processed the instructions it received. It is important to note that a technical glitch did not prevent a TTFAC being passed to Fidelity, but rather the application for the TTFAC being made in the first place. Which would then need to be considered by Fidelity, as Scheme Administrator, for the certificate to be produced. As Fidelity has said, HMRC regulations provide three months for certificates to be generated once requested. I’m only considering the actions of Fidelity here rather than CDV, but as it had attempted to initiate the TTFAC process, presumably having considered Mr F’s specific circumstances, I’m surprised the benefit request was made on 30 June 2025 in the absence of a response. And in submitting the claim CDV specifically answered “No” to the

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important question “Is the client entitled to any transitional protections?” Mr F did have a transitional protection in place, his 2014 fixed protection election, and it might be expected that CDV would be aware it though it had applied for a TTFAC, without response at that point. I understand Mr F’s comments around the Fidelity illustration showing a higher TFC sum than its own calculation. But any illustration generated by CDV and would use standard assumptions and showed the default 25% of fund value figure for TFC stating, with my emphasis in bold, “You can typically take £155,408.65 of this amount as a tax-free lump sum. See section 6 for more details.” So, the illustration didn’t reflect Mr F’s specific circumstances. And Fidelity has confirmed that a copy of the illustration wasn’t sent to it as part of the benefit payment request and wasn’t required for it to action the instructions it had been provided with. Fidelity did have a further manual process in view of Mr F’s age, but otherwise it seems the request would have been automatically actioned. The queries Fidelity raised provided CDV with another opportunity to check what was happening, but this wasn’t picked up on. That Mr F appears to have been unaware of all this must be particularly frustrating, but I don’t think Fidelity has acted unreasonably. It received an instruction from a professional adviser and raised relevant queries. These were answered and it then executed those instructions. I don’t think the reference to cancellation terms being available to Mr F in Fidelity’s documents is relevant here. These provisions had been superseded by HMRC’s updated guidance, but it doesn’t appear any attempt was made to cancel the transaction in any case. And Mr F’s adviser should have been equally aware that cancellation wasn’t an option once the TFC had been paid. So, it wasn’t Fidelity’s role to provide Mr F with advice on pensions legislation, tax planning or any other matters and it correctly processed the instructions it received. As I don’t think it is reasonable to say it treated Mr F unfairly, I can’t uphold his complaint. My final decision My final decision is that I do not uphold this complaint. Under the rules of the Financial Ombudsman Service, I’m required to ask Mr F to accept or reject my decision before 2 April 2026. Nigel Bracken Ombudsman

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