Mrs O v Public Sector Pensions Authority – Unified Scheme - Determination of the Deputy Pensions Ombudsman - 13 October 2018
Full determination - Mrs O v Public Sector Pensions Authority
Summary of determination
This complaint was made by a Mrs O who was a deferred member of the Unified Scheme whose original civil service pension had been bulk transferred to the Unified Scheme in 2012. The complaint against the PSPA broadly related to the failure to inform her of her right to take her pension at 60 (her normal pension age) in 2014 and failure to issue benefits statements with the reminders of the position in 2015 and 2016. The PSPA said that the member had to elect to take the pension from 55 to 75 and any election could not be backdated. The pension was as a consequence only increased in line with inflation from her 60th birthday until it came into payment. Mrs O argued that she had lost the right to two years’ pension payments as a result as if she had been sent reminders she would have taken her pension at 60.
The Deputy Pensions Ombudsman noted during the investigation stage, without reaching a conclusion on this issue, that under preservation requirements of the Pension Schemes Act 1993 (as applied to the Isle of Man) a value equivalence test is required when a preserved pension (a “short service benefit”) is taken at an age earlier or later than the member’s normal pension age. Accordingly, if the start of Mrs O pension and lump sum is delayed beyond age 60, the pension and lump sum should be uplifted by applying a late retirement factor. This would ensure that Mrs O would not lose out as would be the case if her pension only increased in line with the Consumer Prices Index.
The Deputy Pensions Ombudsman did not need in the end to determine the original complaint or the preservation issue as it was subsequently established that under the old Civil Service Scheme there was no facility to defer payment of the pension beyond age 60 and the PSPA backdated the commencement of the pension to age 60 and agreed to pay interest and a small payment for distress and inconvenience.
The Deputy Pensions Ombudsman welcomed the approach the PSPA took in relation to the investigation of the background to this complaint. Mistakes can happen even in a well-run pension scheme. The approach a public authority responsible for managing a public sector scheme or trustees of an occupational pension scheme should take if a mistake is discovered is to apologise (as the PSPA has done) and take steps to rectify or remedy the mistake (as the PSPA agreed to do) and, where appropriate, make a payment for any distress and inconvenience suffered by the member (as the PSPA agreed to do).
Mr N v Boal & Co – Deputy Pensions Ombudsman - 31 October 2018
Full determination - Mr N v Boal & Co
Summary of determination
Mr N made multiple complaints about:
- alleged delays with processing a request to take a drawdown pension
- the time taken to process a request to take responsibility for his pension investments from his independent financial adviser
- the time taken to provide figures for an exit penalty
- general delays and inadequacy in responding to subsequent complaints and requests for information for reasons for the delays which Mr N considered demonstrated systemic failures in the administrative systems of Boal & Co
Mr N also complained about the lack of an adequate apology, alleged untruthful statements and an alleged unjustified attempt to blame the Trustee for the delay when the delays were, in his view, all due to Boal & Co.
In the Determination the Deputy Pensions Ombudsman made the following observations about the duty of care owed by a manager/administrator:
- A manager/administrator of a pension scheme such as the Scheme, adopting good administrative practice, should have service levels in place in relation to the various tasks which need to be performed in relation to the pension scheme and systems in place to monitor performance against these service levels. The service levels will not generally require immediate turn-round of requests from members. Members do need to recognise that a manager/administrator will deal with multiple requests from many members so not all requests can be turned round immediately
- The Deputy Pensions Ombudsman would also expect a good manager/administrator to be pro-active if they are waiting for a response from a third party and not merely respond reactively as and when they are chased by members
- The Deputy Pensions Ombudsman would also expect a manager/administrator to respond promptly to reasonable requests for information from members and deal with any complaints raised promptly and in accordance with an internal complaint procedure professionally and politely with a view to seeking to resolve the matter
- Members should also seek to deal with matters politely and in a measured and proportionate fashion. If allegations are made in a public forum then they need to be in a position to justify them on grounds of truth or fair comment
The Deputy Pensions Ombudsman concluded that there had been maladministration in relation to some of the delays but the waiver of half of Boal & Co’s fee amounting to £665 was in the order of what would have been awarded in respect of those delays and no further distress and inconvenience award was appropriate. In other words the distress and inconvenience sustained had already been adequately compensated for by Boal & Co when it responded to the complaint during the internal dispute resolution procedure.
The Deputy Pensions Ombudsman also determined, however, that the apology given was not adequate as it only covered part of the reason for the delay in appointing Mr N to take over responsibility for the investment decisions. The Deputy Pensions Ombudsman directed that a wider apology should be given.
The Deputy Pensions Ombudsman did not uphold either the complaint that there were systemic failures in Boal & Co’s administrative systems or that Boal & Co had made untruthful statements or certain of the individual complaints about delays.
Mrs D v Public Sector Pensions Authority – Unified Scheme – Deputy Pensions Ombudsman - 10 December 2018
Full determination - Mrs D v Public Sector Pensions Authority
Summary of determination
Mrs D complained that as a result of an inaccurate retirement quote given by the Public Sector Pensions Authority (PSPA) in 2014, she accepted a payment (the MARS Payment) under the Mutually Agreed Resignation Scheme (MARS) offered by the Civil Service Commission. Mrs D alleged:
- There was maladministration resulting in distress and inconvenience. Mrs D’s retirement plans were substantially disrupted
- She had suffered financial loss as a result of relying on the inaccurate retirement quote. She would not have accepted the MARS payment and, on the balance of probabilities, would have continued working if the inaccurate retirement quotation had not been given
Generally an inaccurate retirement quote does not given an entitlement to the inaccurately stated benefit only a right to be put in the position the member would have been in if the correct information had been provided. The Deputy Pensions Ombudsman concluded on the facts (in particular that Mrs D had earlier refused to take a lower MARS offer and pension and the fact that this was not a redundancy situation) that Mrs D would not have retired and given up her job if she had been given correct information about her retirement pension. Accordingly she had sustained loss as a consequence of the inaccurate information for which she was entitled to be compensated. Mrs D was not able to mitigate this loss by obtaining an equivalently well paid job to the one she had given up.
Mr R v Public Sector Pensions Authority – Determination of the Deputy Pensions Ombudsman - 4 January 2019
Full determination - Mr R v Public Sector Pensions Authority
Summary of determination
Mr R complained that he should be entitled to a refund of contributions (with interest) he paid into the IoM Firefighters’ Scheme and then the Unified Scheme (Firefighter’s Section) after he completed 30 years of pensionable service in 2010 in the same way as refunds of contributions are paid in the analogous UK firefighters scheme. Historically the IoM Firefighters’ Scheme was a by analogy scheme providing analogous benefits to the equivalent UK firefighters’ scheme and changes to the UK scheme had in the past always been made to the IoM scheme.
Mr R asked the Deputy Pensions Ombudsman to determine whether:
- it is correct as a matter of law, as submitted by the PSPA, that the Unified Scheme is not required to reimburse employee contributions once he has 30 years’ pensionable service
- there was any breach of the age discrimination requirements on the Island or any other legal requirements by requiring these employee contributions to continue after 30 years and
- there was, as Mr R alleged, a lack of consultation in respect of the transfer to the Unified Scheme from the 1980 Scheme in that he was not told about the break of the 'by analogy' link with the equivalent UK Scheme in relation to the '30 year claim' and his ability to recover past contributions if the UK 30 year claim succeeded
During the complaint process an additional issue was raised about whether at the time of the creation of the Unified Scheme the PSPA should have had regard under general public law principles to the 30 year claim as a relevant factor when determining if the value of his benefits granted in the Unified Scheme were equivalent to those in his old scheme.
The PSPA also submitted that the Deputy Pensions Ombudsman did not have jurisdiction:
- to consider the complaint about the consultation as the consultation was not issued by the PSPA in its capacity as manager of the scheme but pursuant to its wider statutory obligations and
- to consider the complaint about the relevant factors to be taken into account in determining the value of the benefits granted under the Unified Scheme as it related to events occurring more than 3 years before and it was not reasonable in the circumstances for the Deputy Pensions Ombudsman to use his residual discretion to extend the period
The Deputy Pensions Ombudsman determined that:
- there was no requirement under the Unified Scheme (or the 1980 scheme while it still existed) to reimburse the contributions once Mr R had 30 years pensionable service and had reached the 2/3rds pension limit. This was a consequence of the 'by analogy' link being broken before the analogous provisions relating to the repayment of contributions had been brought in force in the UK
- there was no breach of the age discrimination requirements or any other legal requirement by the PSPA by requiring contributions to continue once the 30 year accrual limit was reached. The rules of both the 1980 scheme and Unified Scheme both required contributions to continue to be paid during the relevant period. Also age discrimination laws were not applied to the IoM at the relevant time
- the Deputy Pensions Ombudsman had no jurisdiction to determine whether the 30 year claim should have been dealt with during the consultation process by the PSPA. The consultation was not issued by the PSPA as manager of the scheme but pursuant to its wider statutory duties and
- certain elements of the complaint were out of time and it was not reasonable to extend the time for considering them
Mr N v Ardonan (known at the relevant time as Kreston Pensions (Isle of Man) Limited) - 11 January 2019
Full determination - Mr N v Ardonan
Summary of determination
The complaint related to an investment in an Isle of Man cell company made by the trustee and administrator of a pension plan. The Scheme was a trust based self-directed personal pension scheme authorised by the Financial Services Authority in the Isle of Man. The investment was made on the instructions of the member’s appointed investment adviser immediately following the transfer of the member’s benefits in two UK pension schemes to the pension plan.
The member was originally contacted by an unregulated introducer based in Gibraltar who referred him to investment advisers who were authorised in the UK (but who subsequently turned out only to have authorisation to conduct insurance mediation business and not pension transfer business or to give investment advice).
The member is now unable to redeem his investment for 10 years (other than in limited circumstances) and the member considers, at best, the investment was not suited to his pension plans and he should not have been permitted to invest in the investment having regard to his risk profile as notified to the Trustee/Administrator. At worst the Member was concerned he had been a victim of a scam and his investment is worthless. The Member was not able to successfully pursue the investment adviser in the UK or the introducer for compensation.
The member argued, among other things, that:
- The Trustee/Administrators owed a duty to ensure that only properly authorised and regulated financial advisers could provide advice in relation to the Plan and that they had breached this duty by allowing the investment
- Trustee/ Administrators did not exercise due skill and care in establishing whether the Isle of Man cell company was an acceptable investment for the Plan and breached its duty by failing to carry out adequate due diligence in relation to the investments
- The Trustee/Administrator’s processes were not robust enough, in establishing whether these types of investments were appropriate for individual members
Broadly under the terms of the trust deed the Trustee had to exercise its investment power in accordance with the instructions of the member/appointed representative unless to do so would breach the provisions of the Scheme. Such an investment had to with reference to any schedule or list of acceptable investments made available by the scheme trustee/administrator from time to time.
There were extensive disclaimers in the Administrators terms and conditions recognising that the member was solely responsible for all decisions relating to investments and keeping the Trustee/Administrator fully indemnified against decisions. The Trustee/ Administrator however did confirm that:
'the Trustee/Administrator are professional trustees and administrators who ensure that your retirement fund is managed within relevant legislation and in line with your stated investment strategy. We accept our duties and responsibilities as both trustees and administrators in full. We do not however provide or accept liability for any investment tax or legal advice in relation to your fund. Please consult your financial adviser for a broader definition.'
The Member had ticked a box in his joining documentation stating that his investment strategy was Medium Risk/Balanced.
The Deputy Pensions Ombudsman determined on the facts in this case
- The Administrator owed a limited contractual duty to the member to check whether any proposed investment was consistent with the stated Medium Risk/Balanced investment strategy. It was difficult to see how an investment in the unregulated Isle of Man cell company could be consistent with that strategy. The Administrator did however obtain a signed non-standard investment form from the Member before permitting the investment containing various declarations acknowledging the high level of risk associated with investing in the cell company. It was reasonable for the Administrator to rely on the declaration made by the member in the signed non-standard investment form and take the statement from the Member’s financial adviser implying that they had the necessary authorisations to give advice on the transfer and investments in the cell company at face value. The Administrator was therefore on the facts not in breach of the limited contractual duty they had assumed in relation to the investments to ensure compliance with a Medium/Low Risk strategy
- The trustee of the Plan was not subject to any investment duties to prepare a statement of investment principles and keep it under review under the Retirement Benefit Schemes Act 2000 as the Plan was exempt from these requirements as a self-directed plan. The Trustee of the Plan was not subject to any investment duty to consider suitability of investments or duty of care relating to investments under the Trustee Act 2001 as such a duty of care is inconsistent with the wording of the Trust Deed and rules of the Plan and the contractual documentation to the extent that the Trustee was required to act on member instructions
- Trustee’s investment duties under general trust law were very limited under the wording of the Trust Deed. The Trustee was required under the Trust Deed governing the Plan to ensure that any investment is consistent with guidance issued by the Assessor of Income Tax in the IoM and to comply with any list of permitted investments and subject to this, to give effect to the Member’s instructions to make the investment in the cell company once he was accepted as a member. The Trustee was not however required to put in place a list of permitted investments under its investment powers or under an active duty to review this list from time to time. To the extent that there was a de facto list of acceptable investments in place (which the Pensions Ombudsman concluded there must have been) there was no requirement, to consider specifically whether the investment in the cell company should be a permitted investment in the absence of being put on notice about concerns about its suitability. It was not a breach of trust to permit investments to be made in non-standard/unregulated investments. If the Trustee had failed to follow the Member’s directions to make the investment in the cell company (which was not excluded as a permitted investment at the time) the Trustee would have been acting in breach of trust
- The Trustee/Administrator owed no duty in law to establish whether the Plan was appropriate or suitable for the member or whether the chosen investment was appropriate as an investment for him (other than the very limited duty described in 1 above). The Trustee/Administrator were not authorised to give financial advice on suitability of investments or transfers by the Financial Services Authority and the Plan documentation made that very clear
For the above reasons the Pensions Ombudsman therefore did not uphold the member’s complaints against the Trustee/Administrators.
Mr S v Fedelta - Determination of Deputy Pensions Ombudsman - 11 March 2019
Full determination - Mr S v Fedelta
Summary of determination
Mr S made various complaints against Fedelta as manager and trustees of his personal pension scheme including:
- That the level of charges levied by Fedelta could not be justified by the work done and
- An adequate explanation of charges had not been supplied
The Deputy Pensions Ombudsman did not uphold any of the complaints about charges as the Deputy Pensions Ombudsman concluded that the charges levied were properly due. In relation to the complaint about the explanation of the charges the Deputy Pensions Ombudsman concluded that Fedelta had made genuine attempts to answer the repeated requests for an explanation of the charges and other matters relating to the scheme.
Mr S v Boal & Co (Pensions) Limited (Boal & Co) as trustee and manager of the Boal & Co Select Personal Pension Scheme (the 'Scheme') – Determination of Pensions Ombudsman - 31 May 2019
Full determination - Mr S v Boal & Co (Pensions) Limited
Summary of determination
Mr M’s complaint against Boal & Co related to various investments made by Boal & Co (as trustee and manager of the Scheme) on his behalf in structured loan notes under a policy with RL360 on the instruction of Mr M’s appointed adviser. These investments did not prove good investments and subsequently lost all their value.
Mr M alleged essentially that:
- Boal & Co as trustee and manager of the Scheme owed him a duty of care in relation to the appointment of the investment adviser
- Boal & Co were in breach of the duty as the investment adviser was only regulated for limited purposes in Switzerland and not in relation to the giving of investment advice. Also Boal & Co failed to monitor the investment adviser’s activities and warn Mr S of the high risk nature of the investment and/or loss in value which would have enabled him to mitigate his loss
- More generally the investments made were in breach of the Trustee’s duties in relation to investments or the general law
The complaint was not upheld for the following reasons:
- To the extent that a duty of care was owed in relation to the appointment of the investment adviser Boal & Co had discharged that duty as Boal & Co took steps to confirm the adviser as regulated by a self-regulatory organisation in Switzerland. Boal & Co did not have a further duty to advise Mr M on the limitations of protection offered by Swiss law. Also this aspect of the complaint was out of time
- In relation to the complaint about monitoring the activities of the investment adviser Boal & Co did not owe a duty to advise him of the high risk nature of the investment and under the contractual terms Boal & Co entered into it was accepted that Boal & Co were not giving investment advice and it was reasonable for Boal & Co to assume that the investment adviser would update Mr M of the performance of the investments
- There was no breach of Boal & Co’s investment or fiduciary duties under the trust deed and the general law. Boal & Co did owe a limited duty of care to ensure that investments were made in accordance with the rules and the published list from time to time of permitted investments but, on the facts, had discharged that duty
Mr N v Abbey National International Pension Scheme Trustees (the 'Trustees') – Determination of Pensions Ombudsman – 4 June 2019
Full determination - Mr N v Abbey National International Pension Scheme Trustees (the 'Trustees')
Summary of determination
Mr N’s complaint related to alleged failures in the process adopted for switching the funds available to him as a member of the Abbey National International Pension Scheme (the 'Scheme') when the existing Zurich Life Assurance (ZAL) fund platform was withdrawn and replaced by the Trustees with a new Zurich International Limited (ZIL) fund platform (the 'Platform Switch'). Mr N had very significant pension assets which were invested in the ZAL Managed Fund under the ZAL Platform. The nearest equivalent fund under the ZIL Platform was the ZIL Managed Fund. The background to this complaint is complicated and set out in the determination.
The Pensions Ombudsman concluded, after looking at the documentation and detailed time line of events, that there had been various instances of maladministration in dealing with the fund switches and giving Mr N sufficient notice of the withdrawal and movement of his funds to the nearest equivalent fund on the replacement fund platform. Also as a result of the failures to properly give Mr N sufficient warning of and information on the Platform Switch prior to the Platform switch taking place he has sustained loss for which he was entitled to be compensated.
The Ombudsman directed that payments for distress and inconvenience and an award for the financial loss sustained should be made.
Mr S v RL360 – Determination of Pensions Ombudsman - 12 July 2019
Full determination - Mr S v RL360
Summary of determination
Mr S was a member of a trust-based pension scheme known as the Bourse Retirement Trusts Scheme established in the Bailiwick of Guernsey under Guernsey trusts (subject to Guernsey law) and approved by the tax authorities in Guernsey. It is open to residents and non-residents of Guernsey. This was a complaint brought by a Mr S against RL360 (an Isle of Man based insurer) in relation to the New Earth Recycling Renewables collective investment fund (NERR). The NERR was a 'high risk' collective investment fund open only to 'specialist investors'. NERR has subsequently gone into administration and then into liquidation in or around June 2016. The investments in NERR no longer have any value and the recovery in the liquidation for creditors is expected to be minimal.
Mr S alleged that:
- He has sustained injustice in consequence of maladministration in connection with an action by RL360 (as a person responsible for the administration of the Scheme) and
- RL360 has acted in breach of law,
by failing, as required by the Collective Investment Schemes (Specialist Fund) Regulations 2010 (the Specialist Fund Regulations) to provide the necessary certifications (referred to in paragraph (2) of Part 2 Certification of Schedule 6 to the Specialist Fund Regulations) without which the investment in NERR should not have been made by the NERR scheme administrator.
In particular there was a breach of the Specialist Fund Regulations and maladministration by RL360 by failing to ensure that:
- RL360 had procedures and controls in place to obtain the required client declarations from the Trustee and
- That no investment in this type of fund was made without a client declaration being obtained by the relevant policyholder and/or
failure to obtain the client declarations from the relevant policyholder.
RL360 submitted that the Pensions Ombudsman did not have jurisdiction to consider the complaint on several grounds including:
- The complaint was out of time
- The complaint relates to no breach of law by RL360 but by an alleged breach of law by the NERR administrator as the obligation to obtain the certifications was on NERR under the applicable legislation
- The Pensions Ombudsman has no power to investigate the complaint as it relates to a pension scheme governed by Guernsey trusts and
- RL360 is not a 'person responsible for the management of the Scheme' for the purposes of the Pensions Ombudsman’s jurisdiction
The Pensions Ombudsman concluded, among other things, that the complaint was not out of time. The Pensions Ombudsman also concluded that the Pensions Ombudsman did not have power to investigate and determine a complaint or dispute against a Guernsey based trustee (in relation to a trust governed by Guernsey law). However, there was on the facts potentially sufficient Isle of Man connection to investigate the complaint against RL360 on the basis that it was an Isle of Man insurer which had issued a policy governed by IoM law and the issue complained on was an alleged failure to comply with an IoM regulatory requirement. This was subject however to the act complained of (i.e. an alleged failure to comply with IoM Regulatory requirements in relation to specialist funds) amounting to an act of administration relating to the scheme so that RL360 fell within the definition of administrator for the purposes of the Pensions Ombudsman’s jurisdiction. On the facts the Ombudsman concluded that the particular act complained of was not an act of administration relating to the scheme and that the Ombudsman did not have jurisdiction to determine the complaint. The Ombudsman noted however that the definition of administrator was sufficiently widely drafted to catch an insurer performing certain administrative functions in relation to an occupational or personal pension scheme. It is possible to be an administrator for the purposes of the Pensions Ombudsman’s jurisdiction without falling within the definition of manager for the purposes of the Retirement Benefit Schemes Act 2000. These are different defined terms used for different purposes.
Mr T v British Regional Airlines Group Trustees - 8 March 2021
Full determination - Mr T v British Regional Airlines Group Trustees
Summary of determination
Mr T complained that as a result of reliance on an inaccurate retirement leaving service statement issued in 2008 and an overstated Guaranteed Cash Equivalent Transfer Quote he had sustained legal loss. Mr T submitted that BRAL Trustee should honour the inaccurate leaving service statement. The Trustee had already apologised and offered to pay the sum of £1500 for distress and inconvenience for the mistake in the statement as a result of its consideration of the matter during the internal dispute resolution procedure.
The Ombudsman noted that generally an inaccurate overstatement of entitlement does not give a right to the overstated benefit, only for the member to be put in the position the member would have been in if the statement had not been made. The Ombudsman considered various arguments by Mr T that legally he was entitled to the inaccurately stated benefit on the basis of estoppel and that he had sustained legal loss as a result of negligent inaccurate statements of his entitlement. In relation to Mr T’s complaint that he had sustained loss as a result of the inaccurate statements of his entitlement the Pensions Ombudsman concluded broadly that while that had been a breach of a duty of care in making the statement and that while it may be reasonably foreseeable he may rely on it, on the facts, no legal loss flowed from the inaccurate statement. Also the legal requirements for establishing that the Trustee were estopped from paying out the lower correct benefit were not made out.
The Pensions Ombudsman concluded that the offer of £1500 for distress and inconvenience was sufficient to address the undoubted distress and inconvenience suffered as a result of the inaccurate 2008 deferred benefit quote and the inaccurate 2017 Guaranteed Transfer value. Accordingly no further award was appropriate in the circumstances.
Mr L v (1) British Regional Airlines Group Pension Scheme Trustees and (2) Mercers - 5 July 2021
Full determination - Mr L v (1) British Regional Airlines Group Pension Scheme Trustees and (2) Mercers
Summary of determination
Mr L made various complaint of maladministration about how his applications for early retirement and then retirement at his normal retirement date at 60 were dealt with by the Trustees and Mercers including that he had been treated with 'utter contempt' in dealing with his applications. These applications were dealt with during the period Flybe went into administration and the wind up of the pension scheme was triggered. The Pensions Ombudsman determined, having looked at the time line of events and email exchanges, that Mr L had not been treated with 'utter contempt' by either the Trustees or Mercer. The Ombudsman accepted the submissions by the Trustees and Mercers that they were having to deal with a fast moving situation necessitating revisiting a number of decisions and the benefits on more than one occasion which, due to unfortunate timing, impacted particularly on Mr L. The Ombudsman, however, concluded that:
- There were a number of instances of maladministration by Mercer in implementing the Trustee’s decisions (which had to be revised as a result of the commencement of winding up of the scheme) during the difficult period and
- The original decision not to put Mr L’s early retirement pension into payment on the date agreed (after previously agreeing to do this) was in breach of trust law
In relation to the maladministration by Mercer the Pensions Ombudsman directed that a payment of £1500 should be made by Mercer for non-financial injustice.
In relation to the breach of law the failure to pay the early retirement pension had already been addressed as the Trustees had already later revisited the decision and put the pension into payment retrospectively at a date prior to the triggering of the wind up of the scheme. The Ombudsman however directed that a small interest payment should be made because of the delay in putting the pension and lump sum into payment.
Mr I v Momentum Pensions Limited – Notice of Discontinuance of Complaint - 20 October 2021
Full determination - Mr I v Momentum Pensions Limited
Summary of determination
Mr I made a complaint of maladministration against and referred a dispute of law to the Pensions Ombudsman about Momentum Pensions Limited (Momentum) in its capacity as trustee and administrator of the Momentum Isle of Man Pension Plan (the Momentum IoM Plan). Mr I’s pension was transferred originally to another Momentum pension scheme based in Malta in October 2012 known as the Momentum Malta Retirement Trust and later invested on the advice of his financial adviser in the Lancelot Global PCC Fund (the Lancelot Fund). The funds in the Momentum Retirement Trust were then transferred to the Momentum IoM Plan. Momentum is not authorised under IoM regulatory requirements to provide financial advice and acts on an execution only basis. However, under the terms of Mr I’s application for membership he was required to specify his attitude to risk from a number of options ranging from Very Low Risk to High Risk and had ticked Medium Risk. The application form also stated that Momentum would use this information to undertake appropriate oversight of any investment instruction provided by his investment adviser. There were however various disclaimers in relation to investments and limitations with regard to Momentum’s responsibility.
Following the transfer in 2013 Mr I started drawing down his pension but a couple of years later it significantly decreased in value (by about half) and the financial services authorities in Mauritius put the fund into an administration and eventually a wind up process.
Mr I complained in summary that Momentum failed to carry out adequate due diligence about Mr I’s personal circumstances, and the failed investments. Alternatively, if Momentum allege they did carry out the due diligence Momentum failed to act with due skill and care knowing the investments were unsuitable. In particular
- Momentum failed to operate to the standards expected of a regulated IoM SIPP provider and a professional trustee and these failures led to the applicant’s loss
- Momentum failed to meet their regulatory obligations. Momentum failed to exercise their business with due skill and care
Momentum made various observations about its duties as a SIPP provider including that it was not authorised to provide financial advice and acted on an execution only basis with the client receiving advice from their chosen adviser. The transfer was made on advice of Mr I’s financial adviser and at the time the investment was showing a profit. Momentum also stated in its submissions that it had carried out a review of the investment held by Mr I and concluded having regard to the prospectus that it was not a high risk investment and was consistent with his attitude to risk. Given the Ombudsman’s findings however on certain other submissions made by Momentum the Ombudsman did not need to make a finding on this issue.
Momentum also in its submissions asked the Ombudsman to determine as preliminary issues two issues:
- Issue 1 - Time limit for making complaints – Momentum submitted that the complaint was out of time as the events which are the subject of the complaint occurred more than 3 years after the date the applicant should reasonably have been aware of the facts relating to the complaint and
- Issue 2 – Mr I had made a separate complaint to the ombudsman service in Malta and the Maltese complaint covered the whole time period including the period the funds were invested in the Momentum IoM Plan. Momentum asked that the IoM Proceedings should therefore be stayed pending the outcome of the Maltese complaint
In relation to Issue 2 the Ombudsman concluded that the fact there were proceedings in Malta relating to the Momentum Malta Retirement Trust did not preclude him from investigating the separate complaint in relation to the Momentum IoM Plan.
The Ombudsman however agreed with Momentum that the complaint was out of time under Regulation 5 of the Personal and Occupational Pension Schemes (Pensions Ombudsman) Regulations 1996 as applied to the Isle of Man as Mr I was aware of the halving of the value of the Lancelot Fund in July 2014 and the suspension of the fund in 2015. The Ombudsman concluded that Mr I was aware or should reasonably have been aware of the acts or omissions which were the subject of the complaint/dispute by July 2015 at the latest (that his funds were in an investment which had lost a significant part of its value), and accepted Momentum’s submissions that it was not reasonable for the Ombudsman in the circumstances to use his residual discretion to extend the normal 3 year period for making the complaint or referring the dispute.
The Ombudsman therefore served notice to discontinue his investigation of the complaint or dispute.