Succession Wealth Management Limited · DRN-6169686

The complaint Mrs G complains that Succession Wealth Management Limited (Succession Wealth) gave incorrect advice that she could make monetary gifts from her pension fund to her children free of tax. She says when Succession Wealth became aware that advice was incorrect it then met with her to discuss her options around making the gifts (which all involved paying significant income tax) but it didn’t advise her that the best course of action was not to make a gift. She would like financial compensation for the distress and upset the matter has caused. What happened After her husband unfortunately died, Mrs G inherited a dependent’s pension which she held with the original provider until she became a client of a different adviser in 2018. That arrangement continued and when, in the autumn budget of 2024, proposals were set out (from 2027) which might affect the inheritance tax (IHT) rules for pensions when a plan holder reached age 75, Mrs G asked her adviser if she could make income gifts to her children from her pension free of tax. Initially her adviser said that she could, so Mrs G completed the instruction to arrange the withdrawals. But when the money wasn’t paid by the date suggested Mrs G contacted Succession Wealth. She was then told that because prior to 2015 withdrawals had been made from the plan, any money gifted her children would be taxable. During this time Succession Wealth acquired the previous advisory firm. In early 2025 its adviser met with Mrs G to further discuss the idea of making the “gifts” and set out three alternative recommendations. These included continuing with the idea of withdrawals from her pension but drawing additional funds to cover the tax liability, or using equity release loans to release the funds and using the pension to repay the interest on the loan. Mrs G decided she’d would prefer to draw the funds from her pension and arrangements were made for two separate withdrawals to be made either side of the tax year. But in August 2025 Mrs G complained. She said that the advice she was given in November 2024 encouraged her to make a promise of gifts from the pension to her children. But just before the payment was due, she was advised that she would have to pay tax on the withdrawal and had not understood the full implication of the tax liability until the amounts were taken. She said she wouldn’t have been in that position but for the advice from November 2024, and had she fully understood the tax implications would more likely than not have chosen other actions – including not making the gifts. She said the matter had caused her and her children a great deal of distress having raised their expectations of receiving gifts of (tax free) capital. She also complained about the significant increase in the monthly premium that was quoted to her in relation to a life insurance policy to cover the IHT liability. She says the actual cost following her application has been significantly increased and is now too expensive. Succession Wealth said:

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• In light of the scope and impact of the proposed IHT changes it was appropriate to discuss actions which might mitigate the impact of those changes. • Although there was no sense of urgency in the email exchanges between Mrs G and its adviser it did understand that Mrs G wanted to make the gifts to her children over the Christmas period. • It was regrettable that the adviser’s email from November 2024 was inaccurate – but it was based on information known at the time, and when the correct position around the tax liability was learnt the adviser made Mrs G aware at the earliest opportunity. • In early 2025 the adviser set out three viable alternatives to continue with the idea of gifting to Mrs G’s children. Mrs G agreed to one of these recommendations and it was implemented with payments being made as agreed. The tax liability was discussed and set out clearly and, although Mrs G had paid too much tax initially, that sum would be recovered through completion of her self-assessment tax return. • Mrs G was made aware that the application for life insurance may not be accepted and was subject to underwriting. The current position is that she has an offer for insurance – although the premium has been increased following medical underwiring. But she can choose to accept that cover or see if the adviser can find alternative but cheaper cover. • It had clearly set out Mrs G’s tax position following any withdrawals which might be made, and it believes that the withdrawal recommendation will ultimately save Mrs G and her children a significant amount of tax. It concluded that its advice had been suitable. Mrs G thought that the adviser had misled her with regards to the withdrawal being tax free – and had encouraged her to take that action. She said that they should have checked the position of her plan relating to withdrawals in the first place, and this would have led to her not promising the gifts to her children and avoiding the distress and upset caused by having to reverse that initial promise. She brought her complaint to us where one of our investigators looked into the matter. The investigator said that: • There was no evidence to suggest that Mrs G had suffered a financial loss because of Succession Wealth’s actions. • In February 2025 the adviser did make Mrs G aware of the tax liability on any withdrawal and the likely implications. They thought Succession Wealth had given Mrs G enough information to make an informed decision and it was her choice to proceed with one of the three recommendations to achieve her objective. • But in November 2024 it would have been good practice for the adviser to have carried out further analysis before confirming whether the withdrawals would be tax free. When the correct position was confirmed Mrs G had already ready promised the funds to her children and they had begun to make plans to use the money. • So the investigator thought that Succession Wealth had caused Mrs G significant loss of expectation and considerable distress by providing incorrect information. They thought that Succession Wealth should pay Mrs G £500 for the trouble and upset caused. Mrs G didn’t think the compensation that had been proposed was sufficient. She thought the amount should be significantly higher for the stress and upset she’d been caused.

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She asked for her complaint to be referred to an ombudsman – so it’s been passed to me to review 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. And having done so I’ve reached the same conclusion as the investigator. I imagine this outcome will disappoint Mrs G as she would like us to go further in respect of the compensation that’s been put forward, so I’ll set out my reasoning below. The November 2024 advice In the budget of late 2024 a proposal was announced which aimed to bring unused pension funds and potential death benefits payable from a pension into a plan holder’s estate for IHT purposes. Mrs G, and her beneficiaries, already faced the possibility of additional tax liability on the funds after her 75th birthday so – along with the new proposals that were planned, it didn’t seem unreasonable for her to ask Succession Wealth about the viability of giving “some of the pension to the kids before I’m 75….and as long as I live for another seven years I assume that means they don’t pay tax?” Her adviser said “you can take any money from your pension and there is no tax to pay. There is no tax for the children receiving the money either. At present, and up until April 2027 all of the money in the pension is also exempt from inheritance tax. The government plan to bring pensions back into the estate from April 2027 but that is going to have to go through consultation (let’s assume it proceeds that they do put the pensions back in the estate for the time being). If you gift any money away then that gift follows the normal 7 year rule.” The adviser suggested that they would also probably recommend taking all the money before Mrs G is 75 as, if she dies between age 75 and the 2027 IHT changes, the benefits would still be free of IHT but the children would pay tax on it at their marginal rate. So as it was clear that some action would likely be required before Mrs G’s next birthday it doesn’t seem unreasonable to me that Mrs G was “encouraged” to release funds for gifts – especially as it had been confirmed these funds would be “tax free”. However following internal discussion around its advice to Mrs G, Succession Wealth confirmed that as funds had previously been withdrawn from the plan (pre 2015), the rules in force meant that any future withdrawals would in fact be taxable. The payment to Mrs G was stopped and she was advised of the correct tax position around one month or so after her initial enquiry. Mrs G has told us of the important personal and financial reasons for wanting to gift money to her children. And that when she informed them of her actions expectations were raised around the benefit this would bring. So she says that when the withdrawal was subsequently reversed this caused a great deal of trouble and upset – and disappointment – to them all. And I can understand how events would have unfolded when Mrs G was told she could take tax free benefits from her pension only to then discover this wasn’t the case. Mrs G has also said that she later felt obliged to continue with the idea of gifting to her children – even when she discovered the tax implications of doing so – for fear of letting them down and not

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keeping her promise. She says she would never have found herself in that difficult position had Succession Wealth not given her incorrect information in November 2024. There’s no dispute about what the adviser told Mrs G in November 2024 – and this turned out to be incorrect based on her pension situation. Succession Wealth says its adviser gave the correct information based on what they were told, but I haven’t seen any evidence to support the idea that Mrs G stated that previous withdrawals either had or hadn’t been made from the plan. It was clear that the answer to this question significantly altered the tax position of withdrawals from the pension – as supported by the subsequent internal discussion within Succession Wealth, so I don’t think it was unreasonable for the adviser to have confirmed this position with Mrs G in their initial email exchange. I don’t think it was unreasonable for Mrs G to assume that her adviser would be aware of all the circumstances around her pension plan history, or that at the very least it should have asked her for any further information which might be required in order to make the correct recommendation. So I think any impact this had on Mrs G was to some extent Succession Wealth’s responsibility because of what it said initially. I’ve considered the impact this had on Mrs G. I think she would have been disappointed and also upset about not receiving the tax free funds when she had expected them. But more importantly I think this would have caused her some embarrassment with her children which was a result of actions she took following advice from Succession Wealth. The investigator thought that as this matter caused Mrs G “considerable distress, upset and worry”, wasn’t corrected for over a month after the first inquiry, and was only communicated after Mrs G had already expected the funds to be deposited in her account, a compensatory award was warranted within the range of what would typically be recommended for a matter such as this. The range is between £300 and £750. So I agree that a payment of £500 – as a mid-range award – reflects a fair and reasonable resolution in these circumstances. Our awards aren’t supposed to punish a business but to compensate consumers for the impact of an error or, in this case, the raising of Mrs G’s expectations. I think this award recognises the impact here and is fair and reasonable compensation. The 2025 advice In early 2025 the adviser met with Mrs G, along with her children, to pursue the idea of the lump sum withdrawals. I’ve seen from the planning report that was produced that, having been presented with three alternative proposals for the withdrawals, Mrs G decided to take the “gift” money from the pension plan with an additional amount to cover any tax liability. I’ve also seen that all the appropriate risk warnings were included in the report as well as details of the costs and charges. But importantly the tax implications of the recommendation were also set out in detail. The first noted point around the recommendation set out the amount of lump sum to be released and stated “this will be taxed at your marginal rate.” I don’t think the recommendation was unsuitable or inappropriate when considering Mrs G’s objectives. I think the relevant risk warnings were set out and the outlining of the tax position was clear. I know Mrs G has said that she felt “pressured” into accepting the proposal at this time – especially as her children were also present and she didn’t want to disappoint them further. She thinks Succession Wealth should have included a recommendation not to make any withdrawal due to the change in the tax situation, especially as all the options were based on withdrawing funds. Mrs G felt this put her into a position where she wouldn’t be able to deny her children the funds at that point. I can fully understand the position Mrs G found herself in at that time, but I wouldn’t have expected Succession Wealth to have set out “no action” as another recommendation. It was

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always the case that Mrs G could have declined all the recommendations that Succession Wealth provided and decided not to proceed, but I think it was right for Succession Wealth to provide recommendations that met her previously stated objective. And I understand it was already accepted that Mrs G would have needed to take some action to withdraw funds before her 75th birthday because of the prohibitive tax liability on that benefit crystallisation event. This would have been worsened with the new changes to the IHT rules due to come into force in 2027. I can understand how disappointing it must have been for Mrs G to learn that she couldn’t take the withdrawals free of tax. But the position she subsequently found herself in was the correct position in respect of a tax liability, and would always have been the case when she eventually withdrew funds. So I don’t think there was any financial loss here and I don’t think Succession Wealth provided inappropriate or unsuitable recommendations. This was a question of Succession Wealth raising Mrs G’s expectations of what was possible by initially providing information that wasn’t based on the full extent of the rules on withdrawals from her pension plan because of the previous withdrawals that were made. I also note that the payments were made in line with Mrs G’s request and, although a higher than expected amount of tax was deducted at source, Mrs G’s position will be as set out by Succession Wealth in the suitability report when she claims back the additional tax she paid through her self-assessment return. The associated Life insurance application As part of its overall recommendation package Succession Wealth suggested Mrs G could take out a life insurance policy to cover the potential IHT liability for a period of seven years – which is the period over which an IHT liability tapers off following any gifts that are made. This is known as a Gift Inter Vivos plan. I think this was suitable advice for Mrs G as it would have covered any IHT liability on the gifts arising from her death for an affordable monthly premium. Succession Wealth, in applying for the cover for Mrs G, stated in its suitability report “assuming you can be insured”. I understand the adviser was aware that Mrs G had previously been turned down for life insurance applications because of medical reasons – so I think there was an understanding that this was a possibility here as well. What actually happened was that Mrs G’s application was accepted by a provider, but the premium was increased significantly to reflect the risk of her medical history. This wasn’t Succession Wealth’s fault as it was only responsible for submitting the application and not the medical underwriting. I don’t think it would have been able to foresee that the premium would increase the way it did. But the new premium is only an offer of cover for Mrs G and she is free to reject that offer if she believes it’s now “uneconomical.” I understand that Succession Wealth is willing to search for other providers to see if the same level of cover can be found at a cheaper premium, so that’s an option that Mrs G could consider if she wishes to do so. But in any case, I don’t think Succession Wealth’s recommendation for life insurance was unsuitable and it wasn’t responsible for the change in premium. I haven’t seen any evidence to suggest that it guaranteed Mrs G that cover would be offered at the quoted premium – as it would always be subject to medical underwriting at application stage. Succession Wealth has also offered to look for alternative cheaper cover for Mrs G if it’s available, so I think Succession Wealth has treated Mrs G fairly in that respect. Putting things right In order to compensate Mrs G for the distress and inconvenience caused – as well as the

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raising of her expectations – from the information and advice it provided in November 2024, Succession Wealth should pay Mrs G £500 compensation for the reasons I’ve set out above. My final decision For the reasons that I’ve given my decision is that SUCCESSION WEALTH MANAGEMENT LIMITED trading as Succession Wealth should pay Mrs G £500. Under the rules of the Financial Ombudsman Service, I’m required to ask Mrs G to accept or reject my decision before 14 April 2026. Keith Lawrence Ombudsman

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