Hargreaves Lansdown Asset Management Limited · DRN-6091447

The complaint Mr R complains that Hargreaves Lansdown Asset Management Limited (“HLAM”) failed to pay some income he had requested from his pension savings. What happened I issued a provisional decision on this complaint last month. In that decision I explained why I thought the complaint should be upheld and what HLAM needed to do in order to put things right. Both parties have received a copy of the provisional decision but, for completeness, I include some extracts from it below. In my decision I said; Mr R holds pension savings with HLAM. On 3 March 2025 Mr R called HLAM to discuss accessing his pension benefits. He explained that he wanted to move his pension savings into a drawdown arrangement so that he could take a pension commencement lump sum (“PCLS” – more generally known as tax free cash). And he said that he also wanted to take a taxable income payment before the end of the tax year on 5 April. HLAM explained to Mr R about the steps he would need to take to move his pension savings into drawdown. It told him that he should make an application online for the PCLS payment, and send a secure message the following day to confirm his intention to take an income payment immediately after the PCLS had been paid. At the end of the call Mr R was transferred to HLAM’s stockbroking team so that he could instruct the sale of some of his pension investments to ensure he had sufficient cash in his pension for the PCLS to be paid. HLAM recommended to Mr R that he should convert around 30% of his pension savings into cash. Around a week later HLAM started to process Mr R’s drawdown application. It failed to validate his bank account through its automated processes. So it needed to ask Mr R to provide a copy of his bank statement to allow manual verification to be completed. But HLAM says that given the higher risk of being a non-face to face business it needed to make that request by sending a letter to Mr R’s registered address. It seems that letter took some time to arrive with Mr R. It hadn’t been received when he called HLAM on 18 March to ask for an update on the progress of his application. On that call he was told that a bank statement had been requested. He sent HLAM a copy of his bank statement later that day. But HLAM was still unable to verify Mr R’s details as the bank statement didn’t contain Mr R’s full name. So on 20 March HLAM asked Mr R to provide a copy of his passport. But that was an error – HLAM already held a copy of Mr R’s passport so could proceed with the drawdown application. Mr R spoke again with HLAM on 21 March. On that call he was told that his drawdown application could now proceed and the PCLS would be paid to him. But he was told that he had missed the deadline for the payment of the taxable income – that needed to have been requested by 17 March. And even if the drawdown application had concluded sooner HLAM told Mr R that he didn’t hold sufficient cash

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to allow the additional income payment to be made. So Mr R cancelled the request for the income payment and complained to HLAM about the delay. HLAM didn’t think it had caused any unnecessary delays that had caused the taxable income payment to miss the processing deadline. But it accepted that it had caused Mr R some inconvenience by asking for a copy of his passport when that was already on file. So it paid Mr R £50 as compensation. Unhappy with that response Mr R brought his complaint to us. Mr R has explained to us about his financial position and why it was important to receive an income payment before the end of the tax year. His pension savings with HLAM were relatively modest – valued at around £32,000. Mr R has told us that he is due to receive his state pension in March 2028 and when that is combined with other income he receives he will become liable to pay higher rate income tax. So it is important to him that he takes all his income from his HLAM pension before he receives his state pension so that it only attracts basic rate income tax. He says that, had he been able to receive income in the tax year ending April 2025, he could have achieved that goal. HLAM has provided us with the notes it recorded following its phone call with Mr R when he first enquired about taking his pension benefits on 3 March. Those notes say; “The conversation involved a client seeking assistance with moving their SIPP into drawdown and withdrawing a tax-free amount. The agent provided detailed instructions on how to proceed with the application online and the necessary steps to ensure the process completed within the desired timeframe. The client was advised to sell a portion of their investment to facilitate the drawdown application” I think at this stage I should be clear that I don’t think HLAM has at any time provided Mr R with regulated advice about taking his pension benefits. Those decisions were entirely the responsibility of Mr R, and I don’t believe he would say otherwise. But what HLAM did provide here, as noted in the call note above, was some detailed guidance about the steps Mr R would need to take in order to meet his objectives. HLAM has provided me with a recording of the phone call. I think the summary above is a fair reflection of the conversation it had with Mr R about his drawdown request. But the call also covered Mr R’s wish to take some taxable income from his pension savings before the end of the tax year. He was told that would also be possible, providing nothing went wrong with his drawdown application. Mr R was told the final income payments for the tax year would be made by HLAM on 28 March. He wasn’t told about any other deadlines such as the 17 March deadline HLAM has told him about more recently. I think there are some important features of the call that I will rely on when reaching some conclusions later in this decision. Mr R was advised to make a request for the income payment to be made, following the completion of his drawdown application, by sending in a secure message the following day. I have seen a copy of that message clearly setting out Mr R’s instruction for an income payment of £7,000 to be made during the 2024/25 tax year. Mr R was told that he would need to ensure that his pension plan held sufficient cash for the PCLS payment to be made. So HLAM advised that he sell around 30% of his pension investments to provide some contingency should the value of his pension

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plan increase in the following weeks. But at no time was Mr R warned that he would also need to ensure that his pension plan held sufficient cash for the income payment that he had said he wanted to receive immediately after the PCLS had been paid. Following receipt of the secure message, I can see that HLAM started to prepare for the income payment to be made. On 11 March its income team asked for a confirmation to be sent once the PCLS payment had been made so that the income payment could follow. I think that would suggest that HLAM was satisfied that it had received a valid income payment instruction from Mr R at that time – and most importantly before its 17 March deadline. As I have said earlier, HLAM needed to ask Mr R for some further information before it could complete his drawdown application. It says that its risk processes require that it requests that information by sending a letter. It isn’t for me to interfere with the legitimate commercial decisions that HLAM makes. So I will not make any findings about whether that process is reasonable. But I would note that HLAM was aware of the time critical nature of Mr R’s requests. It had already taken at least five working days before it sent its letter to Mr R. And I would note that it was prepared to ask Mr R for that information by telephone when he later called the firm on 18 March. I don’t think that Mr R should lose out because of any delays in HLAM’s letter being received by him. Mr R responded promptly to HLAM’s request for a copy of his bank statement. And HLAM now accepts that was all the information that was outstanding, even though it later asked for some further verification information. So at the very least, I think HLAM had all that it needed to complete Mr R’s drawdown application by 18 March. That was ten days before the final income payment run of the tax year. I accept that Mr R did not hold sufficient cash for the income payment he had requested. But as I’ve explained earlier it was HLAM that guided him on how much cash he would need to hold in order for his requests to be fulfilled. I think HLAM was therefore responsible for Mr R not holding sufficient cash. So I currently think HLAM bears the responsibility for Mr R’s instruction for an income payment of £7,000 to be made from his drawdown account before the end of the 2024/25 tax year being rejected. I think that it had received and accepted an instruction for that payment to be made on 5 March. And, even if I accept that the delay in Mr R being asked for his bank statement was reasonable, I think that there was sufficient time for the income payment to be processed between the completion of the PCLS payment and the final income payment run. I think the only reason Mr R did not hold sufficient cash to allow the income to be paid was because of the poor information (or perhaps even advice) that he had received from HLAM at the outset of the process. I invited both parties to provide us with any further comments or evidence in response to my provisional decision. Mr R hasn’t provided us with anything further. HLAM has said that it doesn’t agree with my provisional findings. Although here I am only summarising what HLAM has said, I want to reassure the firm that I have read, and carefully considered, its entire response.

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HLAM doesn’t agree that it provided any advice to Mr R. It says it offers an execution only service and that was what was provided to Mr R. HLAM also says that it did inform Mr R of the cut-off dates for Drawdown income payments. It says those dates are shown in the key features document that Mr R would have agreed when instructing his income payments. And the dates are available on its website and on its Drawdown income payment calendar which can be accessed by clients at any time. HLAM says it is an industry wide standard that clients need to hold sufficient cash to support any withdrawals they wish to make. HLAM says that at no stage did it offer to sell any of Mr R’s holdings to facilitate the withdrawal. 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. As I set out in my provisional decision, in deciding this complaint I’ve taken into account the law, any relevant regulatory rules and good industry practice at the time. I have also carefully considered the submissions that have been made by Mr R and by HLAM. Where the evidence is unclear, or there are conflicts, I have made my decision based on the balance of probabilities. In other words, I have looked at what evidence we do have, and the surrounding circumstances, to help me decide what I think is more likely to, or should, have happened. And I repeat my reflections on the role of this service. This service isn’t intended to regulate or punish businesses for their conduct – that is the role of the Financial Conduct Authority. Instead, this service looks to resolve individual complaints between a consumer and a business. Should we decide that something has gone wrong we would ask the business to put things right by placing the consumer, as far as is possible, in the position they would have been if the problem hadn’t occurred. I’ve thought carefully about the additional comments that HLAM has provided. But those comments haven’t caused me to change my mind about this complaint. I would however like to take the opportunity to comment further on some of the matters HLAM has raised. There is always a fine line between providing information and providing advice in matters such as these. To reiterate what I said in my provisional decision I don’t think that HLAM provided Mr R with any regulated advice here on matters such as whether to take income from his pension savings, or the form that income should take. But I do think, in the more general nature of the word, that HLAM did advise Mr R on the operational steps he would need to take in order to receive his pension income. That is entirely to be expected – taking pension income can be a technical process, and Mr R would not have understood the nuances of HLAM’s systems and requirements. And I think that is supported by HLAM’s own note of its interactions with Mr R that says, “The client was advised to sell a portion of their investment to facilitate the drawdown application.” I accept that information about cut off dates could be found on HLAM’s website. But given Mr R had an extended conversation with HLAM about taking his income, I would expect that key information such as those dates would form part of the information he was verbally given. I don’t think it at all reasonable for HLAM to rely on a defence that the missing information could have been found by a consumer searching its website after discussing the matter on the phone with the firm.

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There is little dispute that cash needs to be available in order for income to be paid. That is why Mr R asked HLAM for its advice about how much cash he would need to meet the payments that he was instructing – both the PCLS and the subsequent income payment. So, any shortfall in the cash that was held would be entirely reflective of the information and advice that Mr R was given by HLAM. So, I remain of the opinion that HLAM bears the responsibility for the rejection of Mr R’s instruction for an income payment of £7,000 to be made from his drawdown account before the end of the 2024/25 tax year. I think that there was sufficient time for the income payment to be processed between the completion of the PCLS payment and the final income payment run. I think the only reason Mr R did not hold sufficient cash to allow the income to be paid was because of the poor information or advice (in the general sense of the word) that he had received from HLAM at the outset of the process. Putting things right As I explained in my provisional decision, it seems that Mr R will now not be able to take all his pension income, when allowing for other income he expects to receive, before he receives his state pension and becomes a higher rate taxpayer. I have no reason to expect that Mr R’s marginal tax rate will change in the remainder of his lifetime. So that means that the £7,000 income payment Mr R was unable to take will now become subject to higher rather than basic rate income tax. He will need to pay an additional £1,400 income tax at current rates. I have found that HLAM was responsible for Mr R’s income payment not being made in the 2024/25 tax year. So, I direct HLAM to pay compensation to Mr R of £1,400 to reflect the additional income tax he will need to pay when he takes his pension income. My final decision My final decision is that I uphold Mr R’s complaint and direct Hargreaves Lansdown Asset Management Limited to put things right as detailed above. Under the rules of the Financial Ombudsman Service, I’m required to ask Mr R to accept or reject my decision before 19 February 2026. Paul Reilly Ombudsman

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