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