AJ Bell Management Limited · DRN-6246527

The complaint Mr M complains that AJ Bell Management Limited provided incorrect information to him about his right to cancel a withdrawal from his pension. He also complains about poor service he received from AJ Bell Management Limited. What happened Mr M has a Self-Invested Personal Pension (SIPP) with AJ Bell. He contacted it in July 2025 to request a withdrawal of tax-free cash (Pension Commencement Lump Sum (PCLS)) from the SIPP amounting to £75,000. Mr M says he was intending to use the funds for a business venture. AJ Bell sent him a benefit acknowledgement letter dated 16 July 2025 which stated: “Your right to cancel You have a legal right to exercise cancellation rights if you decide you no longer wish to take benefits on the basis you have chosen. Further details about your cancellation rights can be found within the enclosed benefits guide. If you decide to cancel your instruction, you will need to return any sums or income that have been paid to you. If you do not exercise your cancellation rights within 30 days of taking benefits, you will not be able to exercise these rights at a later date…” Mr M telephoned AJ Bell on 25 July 2025. He said he no longer wanted the PCLS and he wished to exercise his cancellation rights. He wanted the PCLS to be paid back into his SIPP. AJ Bell told him that the information in its letter dated 16 July 2025 was incorrect. He could not cancel the payment. It said it would however refer the matter to its technical team to see if there was any option available to return the PCLS. After further telephone conversations, AJ Bell informed Mr M on 4 August 2025 that he could not cancel the payment. It referred to HMRC guidance which had been issued in December 2024. AJ Bell apologised for having given incorrect information in its letter dated 16 July 2025. It offered to pay Mr M £250 by way of an ex-gratia sum. Mr M was not agreeable to this. He complained to AJ Bell. AJ Bell investigated his complaint. It acknowledged it had made an error in its letter dated 16 July 2025. However, it said the decision not to accept the cancellation of the PCLS was determined by HMRC legislation and was outside of its control. It said the PCLS could only be returned if there had been a “genuine error.” It said Mr M’s case did not fall within HMRC’s definition of “genuine error.” In the circumstances, it could not accept a cancellation of the PCLS. AJ Bell said that even if it had provided correct information in the letter dated 16 July 2025, it did not think that Mr M would have been in a different position. AJ Bell also investigated what Mr M had told it about the service he’d received. It acknowledged that there were occasions when its communication could have been better. By way of compensation for having erroneously told him he could cancel his PCLS, for its communication errors and by way of apology for a separate complaint he’d raised concerning another product he held with AJ Bell, it offered to pay him £500 (in total). Mr M did not accept this. He said he wanted AJ Bell

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to pay the PCLS back into his SIPP. Mr M referred his complaint to our service. Our investigator looked into his complaint. He noted that both parties had acknowledged the information in the letter dated 16 July concerning cancellation rights was incorrect. He also noted that HMRC had issued a communication in December 2024 in which it had made clear that PCLS payments could not be cancelled or returned. If such a payment was returned it would trigger significant tax charges and could amount to an unauthorised payment under the pension scheme rules. Our investigator didn’t think that the payment in this instance could be returned on the basis that a genuine error had been made. That usually applied to clerical or administration errors that occurred where the consumer had no intention of making any withdrawal or an incorrect amount had been withdrawn. Mr M had told our service that he wanted the money for a business venture which had fallen through. But that didn’t mean he had made an error when he requested the money in the first instance. Our investigator then considered whether Mr M would have acted differently if he’d not been told he had cancellation rights on 16 July 2025. He noted that Mr M had other sources of funds which he could have opted to access instead of his PCLS. However, he didn’t think, on balance, that even if AJ Bell hadn’t made the error here, it would have changed Mr M’s actions. Mr M had already requested the PCLS before AJ Bell had given him the incorrect information. AJ Bell had not told him prior to the time when he made the request that he had any right to cancel. Our investigator also noted that Mr M had been asking AJ Bell for information about taking tax-free cash from his SIPP since around 12 June 2025. So, our investigator was satisfied that Mr M had intended to take funds from his SIPP for some time prior to the letter dated 16 July 2025. He didn’t think he had changed his position because of the information in the letter or that he had suffered any financial loss. AJ Bell had offered to pay Mr M £500 (in total) for distress and inconvenience. Our investigator thought this was fair and reasonable having regard to everything that had happened. He didn’t think AJ Bell should have to do anything further to resolve the complaint. Mr M did not agree. By way of summary, he said: • AJ Bell had known since December 2024 that HMRC had said a PCLS could not be cancelled. Despite that, it had not told its customers about this change and had been issuing an incorrect letter to all affected customers since that date. • He thought his case should fall under the “genuine error” exemption. Why had AJ Bell not asked HMRC to look into his request? • £500 was not sufficient compensation to cover the loss he had experienced. He referred to the likely return he could have expected on the PCLS if he’d been able to pay it back into his SIPP. • He had chosen not to take the money from his ISA – precisely because he knew his ISA wasn’t flexible. AJ Bell had misinformed him that he could cancel the PCLS if he took it from his SIPP. Our investigator considered what Mr M had said but he didn’t change his view. So, the complaint was passed to me to decide. I issued a provisional decision in which I said: What I’ve provisionally decided – and why I’ve considered all the available evidence and arguments to decide what’s fair and

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reasonable in the circumstances of this complaint. At the outset, I’d just point out that since the date when our investigator issued his view about this matter, Mr M has raised a number of separate complaints about service he’s received from AJ Bell. Mr M will need to raise those matters separately. In this decision, I will only be dealing with Mr M’s complaint relating to his request for a PCLS in July 2025. The right to cancel a PCLS. In its December 2024 Pensions schemes newsletter (No 165), HMRC stated: “Some pension contracts and policies allow for a cooling off period. Under Financial Conduct Authority (FCA) rules, cooling off rights apply to the purchase of a new product only, for example the purchase of an annuity. The payment of a PCLS or UFPLS is not a new product which means that cooling off periods do not apply to those payments.” The newsletter also stated: “the payment of a tax-free lump sum cannot be undone and the member’s lump sum allowance will not be restored.” The information in the newsletter did not indicate there’d been any change to the rules which applied. However, it was a clear statement of HMRC’s view about how the rules should be interpreted. In September 2025 in its Pensions schemes newsletter (173) HMRC reiterated what it had said in December 2024. The Financial Conduct Authority (FCA) also issued a statement in September 2025 in which it confirmed that the payment of a PCLS was not a cancellable contract under its rules. HMRC says that when a consumer asks for a PCLS that payment cannot be cancelled or reversed unless there has been a “genuine error.” A genuine error can arise for example where an administrator inadvertently makes a payment where there was no intention to make a payment to that extent or at all. Mr M has not disputed that he asked AJ Bell to make the payment to him. The payment was for the amount he had requested. So, to that extent no “genuine error” was made by AJ Bell when it made the payment to Mr M. AJ Bell did make an error when it told Mr M, after he had requested the payment, that he had a right to cancel the payment – but that does not mean there was a “genuine error” (under HMRC rules) when it processed and made the PCLS payment he had requested. Mr M says he would have expected AJ Bell to consider approaching HMRC about whether he should be permitted to have his lump sum restored to his pension. I asked AJ Bell to comment on this. It says there were several reasons for not approaching HMRC - including the fact that HMRC would only look at a specific case where there was genuine ambiguity in the underlying legislation. As set out above, HMRC confirmed in September 2025 (newsletter 173) that PCLS payments could not be undone and the FCA also confirmed in September 2025 that there was no right to cancel a PCLS payment under its rules. In these circumstances AJ Bell says there was no reason to approach HMRC about what had happened. HMRC’s interpretation of the rules had been made clear in the HMRC newsletters (165 and 173) and also in the statement from the FCA (September 2025).

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Having considered everything, I think the reasons AJ Bell has given for not approaching HMRC are fair and reasonable. So, the position remains that the PCLS payment made to Mr M cannot be cancelled under the rules that apply to payments of this nature. The error made by AJ Bell As I’ve stated above AJ Bell should not have told Mr M in its letter dated 16 July 2025 that he could cancel the payment. It acknowledges that. However, it points to the fact that it had not told him, prior to the date when he requested the payment, that he had a right to cancel. Mr M also did not ask it about whether he could cancel the payment. Mr M says that AJ Bell would have known since December 2024 that PCLS payments could not be cancelled. It did not communicate this to its customers. He would have expected it to have done that. And he would not have expected AJ Bell to provide incorrect information about cancellation rights in the letter it sent to him in July 2025 – some six months after the HMRC newsletter. AJ Bell has now sent us sample screenshots from the online customer journey which Mr M used when he applied for the PCLS payment. It’s told us it cannot replicate the exact screens Mr M would have seen. Having looked at the screens, there is nothing which mentions cancellation rights at all. So, there was no indication that the payment could be cancelled and there was also nothing to say that it could not be undone once the request had been made. The screens were silent on the matter. Having looked at the screens provided, my provisional view is that AJ Bell could have done more to make Mr M aware that the payment could not be cancelled before he requested the payment. When reaching that view, I have taken into account the fact that AJ Bell provided an execution-only service to Mr M. It did not provide advice to him. Nevertheless, I think it’s fair and reasonable to have expected it to provide accurate and up to date information to him especially where it had, subsequent to the HMRC December 2024 newsletter, changed its policy about offering cancellation rights where a consumer requested a PCLS. That change in policy was to bring its procedures into line with what HMRC had stated. I’ve also taken into account the fact that Mr M had previously asked for a PCLS in September 2024. He had selected to access his fund at 31 October 2024. At that time, he had been offered cancellation rights. However, he cancelled his request to access his fund prior to 31 October 2024 – so no payment was processed. Nevertheless, Mr M would have been aware that AJ Bell permitted its customers to exercise cancellation rights when a PCLS was requested. So, for that reason also, I think it’s fair and reasonable to have expected AJ Bell to have brought the change in its policy regarding cancellation rights to the attention of Mr M at the point in time when he requested a PCLS in July 2025. AJ Bell did not do that. AJ Bell also should not have said in the benefits letter, which it issued after the request had been made, that Mr M had a legal right to cancel the payment. AJ Bell says it has now updated its website and has removed the wording about the right to cancel from its “benefit acknowledgement” letters. I’ll comment further below about whether I think Mr M would have made a different decision concerning taking his PCLS if he’d been told it could not be cancelled.

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What I’ve provisionally decided needs to be done to put things right When a business makes an error, or where, as here, it hasn’t provided all the information we think it should have provided and/or it has provided incorrect information to a consumer, it’s not our role to fine or punish the business. We look to see what it has done or offered to do to try to put the consumer back into the position he might reasonably have been in had he been given the correct information. Financial Loss Mr M says that if he’d been told he had no right to cancel the PCLS request, he would have used funds from other resources he had, rather than requesting the PCLS. He’s referred to an ISA, gilts, Premium Bonds and property assets which he held. It’s not possible to be certain what Mr M would have done if he’d been given the correct information by AJ Bell. So, I’ve made my decision about what I think is most likely to have happened, having considered all of the information available at the time, and on the balance of probabilities. Mr M says he requested the payment because he needed it for a business venture he was considering at the time. I can see that he contacted AJ Bell in June 2025. He made enquiries about how much tax-free cash was available to him. At that time, he said he was considering moving his account. He contacted AJ Bell again on 7 July 2025. He enquired about taking income from his pension of around £3,000 to £4,000 per month. He said he was looking into the tax implications of doing this. It’s not clear if either of these queries related to the business venture Mr M was considering. However, it’s clear he was considering doing something with the funds in his SIPP. There was no discussion about whether there would be any right to cancel if he proceeded with either of the options he had discussed. Mr M did have other resources. He’s referred to an ISA, UK gilts and property assets which he held. So, I’ve thought about whether he might have accessed these resources to fund the business venture if he’d been told he couldn’t cancel the PCLS. Mr M has provided evidence about the ISA he held. It was not a flexible ISA but he did have sufficient funds in his ISA to have funded the proposed business venture. However, if Mr M had taken the funds from his ISA, he would not have been able to undo that withdrawal. He acknowledges that this was the case. So, if he had used his ISA to fund the business venture, he wouldn’t have had a right to cancel and immediately reinvest the funds back into the ISA. That was the same position as he was in when he was told he couldn’t cancel the PCLS. Mr M hasn’t provided evidence to support what he’s told us about his UK gilts and his Premium Bonds. So, it’s not clear what the gilts or the Premium Bonds were worth. He also hasn’t provided any evidence about other sources of funds he says he could have accessed. In these circumstances, I’ve no evidence to support what he’s told us about being able to access his UK gilts, Premium Bonds or other sources of funds. So, I cannot comment further about whether it’s likely he could have accessed these funds instead of the PCLS to fund the business venture or whether that would have put him in a different position. I’m also not persuaded that he would have sold his property assets in order to fund the business venture. I’ve not been provided with evidence about the property assets

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he held. But, in any event, a sale of property assets would usually have taken a much longer time period before cash would have been released. The sale of a property is also not reversible. So, I’ve provisionally decided, on balance of probabilities, and based on the evidence that’s been provided to our service, that irrespective of how Mr M had accessed cash for the proposed business venture he would not have been able to put himself back into the position he was in, immediately prior to accessing that cash, when the business venture did not proceed. For the reasons set out above, I’ve decided it’s likely, on balance, he would still have chosen to access his SIPP in the way that he did - even if he’d been told it was not cancellable. And I’m not persuaded he changed his position to his detriment because AJ Bell hadn’t told him, before he made the PCLS request, that it was not cancellable. The fact that AJ Bell provided incorrect information to him, after he had requested the PCLS, does not change that. I’m also not persuaded on balance that even if the letter dated 16 July 2025 had stated that the PCLS request could not be undone, Mr M would have immediately tried to cancel the payment. AJ Bell says there might have been a very narrow window of time to cancel the payment – before it had started to process his request. But it was several days later before Mr M realised that the business venture was not going to proceed and by that stage the payment had already been processed. So even if he’d been given the correct information, I’m not persuaded, on balance of probabilities, he would have wanted (or have been able) to cancel the payment within the very narrow timeframe that might have been available to him. Having considered everything, for the reasons stated above, I’ve provisionally decided, on balance of probabilities that even though AJ Bell made an error here, Mr M did not change his position to his detriment as a result of that error. And I’m currently not persuaded, on balance, he has suffered any financial loss as a result. Distress and Inconvenience Mr M has also complained about the poor service he experienced from AJ Bell. For example, he says: • it agreed to escalate the matter to its technical team but failed to do so within a reasonable period of time; • he was unable to speak to senior staff when he telephoned; and • he was told lies about whether other customers had been affected by the same error. I have listened to the telephone calls that occurred in the period since 25 July when Mr M indicated that he wanted to cancel the PCLS. I can understand why he was frustrated when he was told that he could not cancel the payment. AJ Bell did acknowledge it had made an error in its letter, and it told him that it would look to see if anything could be done in the circumstances. But it took some time before a definitive response was provided on 4 August 2025. Having listened to the calls, I am satisfied that AJ Bell did escalate the matter internally to both its technical team and its senior management. That process took longer than Mr M expected, but I’m not persuaded that the delay in giving him a final response was because AJ Bell hadn’t given the matter its attention. I can also see that Mr M was frustrated because he couldn’t speak to senior

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management immediately when he telephoned. It’s not always possible to facilitate such a request. However, a senior manager did speak to him and provided explanations on 4 August 2025 – which was six working days after he had asked for the PCLS to be paid back into his SIPP. She also acknowledged that the erroneous information had been in the standard benefits letter sent to all of its consumers and she was taking action to have the letter amended. It remains the case however that the error was made and Mr M has experienced distress and inconvenience as a result. He’s had to contact AJ Bell several times during the period after 25 July 2025 and he was disappointed, after his proposed business venture did not proceed, when he was informed that he could not return the PCLS. AJ Bell has offered to pay him £500 by way of compensation for distress and inconvenience. Having regard to everything that happened here, and to our guidelines for awards of this nature, I think that is fair and reasonable. I don’t intend to require AJ Bell to have to do anything further. My provisional decision For the reasons set out above, I intend to uphold this complaint about AJ Bell Management Limited. AJ Bell Management Limited has already made an offer to pay Mr M £500 to settle this complaint and I think this offer is fair in all the circumstances. So, my provisional decision is that AJ Bell Management Limited should pay Mr M £500. AJ Bell responded to my provisional decision. It said it noted that no further action or redress was required beyond what it had already offered in its final response. Mr M also responded to my provisional decision. He said he wanted to speak to me about the decision. Our investigator informed him that if he had any further points to make or new information to provide, he could send an email or write to our service, and his correspondence would be provided to me. I would then be able to consider any new information or evidence before issuing my final decision. Mr M was dissatisfied with this, but our investigator explained to him that the Ombudsman wouldn’t usually speak to a consumer, and he reiterated that any further evidence or information could be submitted by email. Mr M responded to say he had “very reluctantly taken it.” He didn’t think he should have to contact me through the investigator. So, I now need to make my final decision. 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. Mr M has not provided any new evidence or information to our service since the provisional decision was issued. He was informed that if he had anything further to add he could email or write to our service and I would then be able to consider what he had to say. He hasn’t explained why he isn’t able to do that. I have thought about Mr M’s request to speak directly to me but having considered everything I don’t think that is necessary in this case to enable me to reach a fair decision. I’d just reiterate however, that I have considered all of the evidence and arguments that have

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been submitted to our service before reaching my decision. Having considered everything again, I’ve not received any new evidence or information that causes me to change my view, or the reasons for my view, as set out in my provisional decision, about how this case should be resolved. My final decision For the reasons set out above I uphold this complaint about AJ Bell Management Limited. AJ Bell Management Limited has already made an offer to pay Mr M £500 to settle this complaint, and I think this offer is fair in all the circumstances. So, if it has not done so already, my decision is that AJ Bell Management Limited should pay Mr M £500. Under the rules of the Financial Ombudsman Service, I’m required to ask Mr M to accept or reject my decision before 23 April 2026. Irene Martin Ombudsman

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