The Pension Ombudsman has directed that a professional trustee company pay £2,000 to compensate a member for the significant distress and inconvenience caused by its maladministration in relation to a pension scheme. This level of award demonstrates the Ombudsman’s increasing trend towards directing higher compensatory sums where members have suffered “considerable injustice”.
Background
Following a review of his pension arrangements in 2013, Mr S transferred approximately £150,000 of his pension savings across two pension schemes into a single scheme – the Pinnacle Pension Scheme (the “Scheme“). According to Mr S, his decision to transfer to the Scheme was exacerbated by the fact that Pinnacle asserted that his former occupational pension scheme was facing financial difficulties.
Chartwell Trustee Pension Solutions Ltd (“Chartwell“) acts as sole trustee to the Scheme.
In June 2013 Mr S received a statutory money purchase illustration (“SMPI“) showing that he would receive £0 in retirement from the Scheme. Extremely concerned by this he contacted Chartwell but did not receive a response.
Almost 16 months later, on 1 October 2015, Mr S received a telephone call from an individual claiming to represent Chartwell. On this call, the individual confirmed that Mr S’s pension value was £148,800 and that it, “was doing well”. A telephone number (which simply rang out when dialled) and email address were provided by way of contact details but no postal address was given. The Chartwell representative further confirmed that Mr S could expect an annual statement by the end of the month. However, Mr S was very concerned by the fact that the caller did not know who Pinnacle Pensions were and had no knowledge of the Pinnacle Pensions website!
Alas, no SMPI arrived by the end of October 2015 and so during the first week of November 2015 Mr S complained to Chartwell under the Scheme’s internal dispute resolution procedure (“IDRP“). That same week Mr S received another telephone call from an individual from Active Pensions Limited, who purported to be the same person he spoke to on the October call but this time he gave a different name. However, on this occasion the caller did confirm that Mr S’s pension was being held by Pinnacle (contrary to the information provided in October!). A further telephone number was provided but again, this simply rang out when dialled.
Finally on 12 November 2015, the long awaited SMPI did arrive but it showed a fund value of £140,800. Concerned by the discrepancy in fund value over such a short period of time (£148,800 was quoted to Mr S on 1 October 2015), Mr S tried contacting Chartwell again but to no avail. On 17 November 2015, Mr S wrote to Chartwell requesting a response to his IDRP complaint and explaining the difficulties encountered in trying to contact Chartwell. Chartwell responded to acknowledge that its “communication with Mr S has fallen short of its normally high standards” and offered £250 compensation to Mr S.
Mr S was not satisfied with this response nor the offer of compensation which he felt was completely inadequate following the catalogue of problems experienced – emails being ignored, telephone calls ringing out unanswered and contact numbers proving to be invalid. Without the information requested (including the discrepancy as to his fund value) he was unable to plan for retirement. Furthermore, Mr S’s anxiety levels and worry had escalated to a point where he genuinely thought he had fallen victim to a pension scam and that his savings were lost. He subsequently complained to the Pensions Ombudsman.
Ombudsman’s determination
The Ombudsman upheld the complaint, agreeing with the adjudicator’s opinion that Chartwell were guilty of maladministration. The Ombudsman referred to the following failures to provide documentation within prescribed timeframes:
- as trustee of the Scheme, Chartwell has legal and fiduciary duties in respect of the Scheme and its members – in this case the duties were not properly adhered to;
- the Occupational and Personal Pension Schemes (Disclosure of Information) Regulations 2013 place a statutory duty on trustees to provide certain information and documentation either routinely or upon request;
- a summary funding statement must be sent to members at least annually. In this case Chartwell has been unable to demonstrate that such statements were sent to Mr S;
- regulations require that where a member requests certain information, it must be provided within two months of the date of request; and
- transfer values must be provided within three months of a request being made – whilst Mr S did not specifically request a transfer value, the Ombudsman did reiterate this point.
The Ombudsman also found that Chartwell failed to operate the IDRP in accordance with legislation, a further example of maladministration.
The Ombudsman concluded that Chartwell’s behaviour towards Mr S had been “extremely uncooperative for no relevant reason”. The catalogue of problems encountered by Mr S caused him “significant” distress and inconvenience and whilst Mr S had been unable to substantiate, with evidence, his claim that the apparently same individual identified himself with two different names, gave different business names, and contact addresses, the Ombudsman found Mr S to be a reliable witness. The Ombudsman’s concerns over Chartwell’s handling of the matter were further compounded by the adjudicator confirming similar difficulties in contacting and dealing with Chartwell.
The Ombudsman directed Chartwell to pay Mr S £2,000 for distress and inconvenience caused by its maladministration. Furthermore, Chartwell were ordered to provide Mr S with the information he requested within 14 days of the determination and to action a future transfer-out of the Scheme if Mr S so desires.
Wedlake Bell comment
In most cases, the Ombudsman’s redress for non-financial injustice ranges from £500 to £1,000. The severity of this case demonstrates the Ombudsman’s willingness to increase such awards where trustees and/or administrators fall short of complying with their fiduciary and statutory duties. Chartwell’s lack of cooperation with the Ombudsman was clearly an aggravating factor in the determination, however, one cannot lose sight of the fact that we now live in an environment where pension scams and fraudsters are making the authorities sit up and pay attention to suspicious or shoddy behaviour. This can only be a good thing for pension savers.
The determination also acts as a reminder that the Ombudsman’s directions are, if necessary, enforceable in the County Court.