Mr T v Royal London

26 July 2016
On the 5th of July¹ the Pensions Ombudsman determined that Royal London was not liable for any further action having allowed a member to transfer their funds to a pension scheme which later became insolvent.

What happened

The facts

  • The member, Mr T, transferred his pension fund to the Capita Oak Scheme on 14 November 2012
  • The fund value at that time was £112,541.90
  • Following action by the Insolvency Service, the Capita Oak Scheme went into liquidation in June 2015.

The complaint

Mr T’s submission to the Ombudsman was that Royal London was at fault in that they had “failed to perform due diligence and/or make adequate checks to ensure Capita Oak was a genuine pension scheme before transferring his pension funds”.

The judgement

Although expressing sympathy for Mr T’s position, the Pensions Ombudsman ruled that it was not maladministration to make the transfer on the grounds that:

  • There was no evidence that Royal London had any specific concerns at that time in relation to the Capita Oak Scheme - which might have warranted a refusal of Mr T’s statutory transfer right
  • The recent High Court judgment in Hughes v Royal London indicates that Royal London could not have legitimately refused Mr T’s transfer request, had they wished to do so.
  • The transfer took place before Regulatory guidance provided advice on areas for potential concern, flags and appropriate warnings in February 2013. The fact that Royal London – and the industry generally – may have already been discussing similar points (e.g. the possibility of a generic warning paragraph), does not impose a duty on them to go further than the law or the regulator required at the relevant time.

The Pensions Ombudsman further commented that without the benefit of hindsight it is possible that Mr T may have transferred his benefits even if Royal London had raised concerns about the receiving scheme.


Clearly a ruling in favour of Mr T would have gone against that of the High Court in Hughes v Royal London, which must currently provide a precedent. The fact that this, and so many other cases have been brought highlights the need for more definitive guidance, if not legislation, on the role of providers in helping to protect policyholders against pensions scams.

Royal London is strongly committed to protecting the interests of their clients but must act within the rules as they apply at the time. More action from the government and HMRC could make it harder to set up new pension schemes with the intent to defraud consumers, and make it easier to identify and restrict transfers to any which are considered suspicious, and could also ensure that more regulated guidance is required in respect of investments which involve particularly high risk.

In the meantime individual pension savers need to recognise the warning signs and act prudently when dealing with their funds.

We always recommend that any individuals looking to transfer their pension benefits should speak to a qualified financial adviser.

Further information:


1 The initial ruling by a PO adjudicator was challenged by Mr T but upheld by the Pensions Ombudsman on 5 July.

About the author

Fiona Tait

Pension Specialist

Fiona joined the life and pensions industry in 1989. She is a Fellow of the Personal Finance Society, an Associate of the Chartered Insurance Institute and is currently Vice-President of The Insurance Society of Edinburgh. Fiona specialises in the areas of at retirement planning and pensions and divorce.

Last updated: 28 Nov 2016

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