A story in The Sunday Times about advice on pensions given to a "secret shopper" was inaccurate and required a correction, the Independent Press Standards Organisation (IPSO) has ruled.
Mike Hardy, managing director of Abacus Advice Ltd, complained that the story, headlined "'Petrifying' advice given on pensions", published in print and online on 12 April last year, breached clause one of the Editors' Code of Practice, covering accuracy.
The story reported the findings of an undercover "mystery shopper" investigation into pension advice offered by firms following changes to pension rules.
A journalist posing as an unemployed client who was seeking to withdraw between £40,000 and £45,000 from a £100,000 pension fund called financial advice firms wanting to know if the money could be withdrawn tax-free.
Hardy was among those whose responses were criticised in the article.
In the story, he said he "appeared to tell the reporter that there would be no tax implication if she withdrew 45 per cent of her pension pot" whereas "in reality, most pensions allow people to withdraw only 25 per cent of their fund tax-free, with the remainder being subject to income tax".
Hardy complained that The Sunday Times claim he had given the reporter "advice" was inaccurate because this implied he gave regulated financial advice over the phone.
He also said it was inaccurate to suggest that he gave the reporter misleading information – it was not controversial to say she would not have to pay income tax if she did not have an income. If the reporter was entitled to tax-free money, she would not have to pay income tax on her withdrawal.
Hardy said that during the course of their conversation, he made clear that in most circumstances, people seeking to withdraw money from their pension would only be entitled to withdraw 25 per cent tax-free, in addition to the standard tax-free allowance (£10,600).
Hardy said that at the time of the conversation he was suspicious that the person to whom he was speaking was a journalist, and so was therefore particularly mindful not to provide inaccurate information.
The newspaper said that it was not misleading to report that Hardy gave the reporter "advice" over the telephone. While the term "advice" had specific definitions under FCA guidelines, it was simply used to describe the information Hardy gave the reporter, The Sunday Times said.
The newspaper acknowledged that Hardy had said during the conversation that he was unable to say with certainty what the journalist's entitlement to tax-free money would be without contacting her pension provider, but said it took the view that the conversation as a whole would have left a potential client with the unrealistic impression that £40,000 to £45,000 could be withdrawn tax-free.
In an effort to resolve the complaint, it offered to expand the online article to include a statement provided by Hardy which would reflect more explicitly that he would not have made any specific recommendations to a potential client without first contacting his or her pension provider, and to publish a clarification in print in its "Corrections and Clarifications" column, and online beneath the article.
IPSO's complaints committee recognised the public interest in conducting mystery shopper exercises to investigate and expose impropriety, particularly when it could have an impact on the vulnerable.
The newspaper was entitled to criticise the conduct of pension advisers on the basis of the information gathered by the journalist, given the potential risks, but was obliged to do so in a manner that was not misleading.
It was not misleading to describe the information Hardy gave as "advice", the committee said.
The newspaper was entitled to take the view that Hardy's responses to the journalist's inquiries were open to criticism, provided that that criticism was not based on factual inaccuracy.
The article said Hardy "appeared to tell the reporter that there would be no tax implication if she withdrew 45 per cent of her pension pot", which the committee concluded gave a misleading impression of their conversation as a whole, which was not remedied by the use of the word "appeared". Hardy never specifically advised that the journalist could withdraw 45 per cent of her pension fund tax-free – had he done so this would plainly have been "bad" advice.
The failure to refer to Hardy's repeated qualification or to the fact that he had only ever referred to 25 per cent of the money being tax-free amounted to a failure to take care not to publish misleading information in breach of clause one.
The committee required the publication of a correction. The clarification offered by the newspaper did not identify the misleading information published, so the newspaper should include in the published correction the fact that Hardy had not told the journalist that she could withdraw 45 per cent of her pension fund tax-free.
The correction should appear beneath the online article and in its clarifications and corrections column in print, and should explain that the correction is being published following a ruling by IPSO.
Since IPSO was founded in September 2014, the body has ruled on three complaints made against The Sunday Times, two of which have been upheld.