Determinations

Full determination - Mr S v Boal & Co – Prestige Personal Pension Scheme

Summary of determination

Mr S made a complaint against Boal & Co as trustees and manager of the Prestige Pension Scheme (the Scheme). The complaint relates to the alleged failure by Boal & Co to deduct 3 years’ worth of fees in a timely manner despite Mr S asking for statements showing the fees taken.

Boal & Co then deducted 3 years’ fees amounting to £315.05 in a single lump sum when the fees only amounted to £314.55. Mr S considers that Boal & Co should, in the circumstances, have waived the fees, or at least offered a 50% discount on the fees charged over the three-year period, in recognition of the alleged injustice he has sustained as a consequence of Boal & Co’s alleged maladministration.

The Ombudsman was satisfied that there has been maladministration by Boal & Co. The Ombudsman considered that a reasonably competent administrator would have deducted the fees due within a reasonable period of the end of each calculation year and provided information on the fees deducted each year. Failure to deduct the fees for three years due to administrative error is a classic example of maladministration.

That said, Mr S cannot be said to have sustained any legal loss as a consequence of any failure to deduct the fees due on an annual basis. If anything he has benefitted from it in financial terms as effectively he has been given an interest free loan which remained invested in his personal pension scheme account.

The Ombudsman did agree, however, that Mr S has sustained injustice as a consequence of the administrative failures by Boal & Co as he has been put to inconvenience in sorting this out and also is clearly very annoyed, if not outraged, in his various submissions.

The question then is whether the remedy offered by Boal & Co adequately addresses the non-financial injustice Mr S has sustained. Mr S has, however, effectively had the benefit of an interest free loan during the period the fees were not collected. The additional money (not deducted) was invested. So it could be argued that this is sufficient to address any non-financial injustice. Boal & Co also offered to waive 6 months fees if Mr S transferred out.

The Ombudsman’s conclusion was that the offer of a waiver of 6 months’ fees made by Boal & Co would have been adequate in the circumstances but only if the waiver applies regardless of whether or not he decides to transfer out. The best way to address the injustice is in the Ombudsman’s view for fees to continue to be deducted as normal as per the terms and conditions but direct that Boal & Co pay Mr S the sum of £72.50 whether Mr S transfers out or not. It is for Mr S to decide whether he wishes to accept the proposal to transfer out if he can find a suitable provider who is willing to accept the transfer. Mr S later decided to transfer out to a new scheme with the previously proposed fee waiver.

Full determination - Mrs S v Boal & Co – Trinity Pension Scheme

Summary of determination

Mrs E’s mother, Mrs S, was a member of the Trinity Pension Scheme (the 'Scheme') which is a self-directed personal pension scheme established under IoM trusts. The Scheme was established to enable a transfer to be made from Mrs S’s deceased husband’s self-directed pension scheme following his death.

The Trustees and manager of the Scheme are Boal & Co. Mrs S has entered into a contract with Boal & Co as trustee and manager of the Scheme when she applied to join the Scheme following the death of her husband. The contract set out the terms and conditions of engagement and the functions they agreed to perform in relation to the Scheme.

The Scheme’s assets were invested by Boal & Co in an insurance bond (a type of insurance policy) with Utmost (an Isle of Man insurer previously known as Quilter) (Utmost) under which various insurance linked investments were taken out by Mrs S including an investment in the Hermione Fund which is now potentially worthless. Mrs S’s Independent Financial Adviser at the time the Scheme was established and the date the investment was made was IIM Ltd (IIM) which was also Mrs S’s appointed fund manager for the purposes of the Scheme.

Mrs E has made various complaints against Boal & Co, Utmost and IIM about the following issues

1. Complaint 1 - The decision to invest in the Hermione Fund – now in liquidation and possibly worthless depending on any recovery from the liquidators
   
   
2. Complaint 2 - The continued deduction of IIM fees from Mrs S’s funds following the instruction by Mrs S to Boal & Co to remove IIM and stop those fees being deducted
   
   
3. Complaint 3 - Delays in transferring the underlying fund to new discretionary fund management arrangement within the insurance bond with Utmost due to alleged delays in the encashment of the Hermione Fund units following instructions to divest the units

The Ombudsman concluded that he did not have jurisdiction to investigate any of the complaints against IIM (which IIM denies have any merit) as IIM was not a manager or administrator for the purposes of the Ombudsman’s jurisdiction. The Ombudsman also exercised his discretion not to investigate and determine the complaints against Utmost to the extent that he had jurisdiction to do so. The Ombudsman considered that both the complaints against IIM and Utmost (which they both deny) are more appropriately dealt with by the Financial Services Ombudsman Scheme in the IoM.

In relation to Complaint 1 the Ombudsman concluded, having reviewed the Trust Deed and Rules, that Boal & Co as Trustee and Scheme Administrator had very limited obligations in relation to the investments. This was a genuine execution only self-directed scheme under which the Trustee was required to follow the instructions of the appointed investment manager in relation to the investments or the member where they were appointed as adviser. The Trustee was not responsible therefore for the initial investment in the Hermione Fund. The Trustee’s only responsibility was to ensure that the selected investment was a permitted investment for the purposes of the Trust Deed.

Mrs S would have been aware that Boal & Co was not providing investment advice from the Application Form she signed. Boal & Co had no obligation under the terms of the Trust Deed and Boal & Co's terms of engagement to assess the suitability of the investments made by IIM as appointed Investment Manager on her behalf. The Ombudsman therefore did not uphold Complaint 1 against Boal & Co.

In relation to Complaint 2, the Ombudsman concluded that the steps taken to replace IIM as fund manager were inadequate to give effect to Mrs S’s clear instructions to stop all further fees being paid to IIM contained in the emails and letter sent by Mrs S to Boal & Co. If Boal & Co had contacted Utmost directly to confirm that the fees should stop when instructed, the fee deduction by IIM could not have continued. Moreover, if Boal & Co had queried the fact that there were two Regular Policy Management Charge at this stage Boal & Co would have realised that IIM was still being paid trail commission after they had been removed and that they had not given effect to Mrs S’s instructions to stop the fees being paid to IIM. The Ombudsman therefore upheld Complaint 2.

The Ombudsman concluded that Boal & Co should repay Mrs S the charges which were deducted after she instructed Boal & Co to stop the IIM charges in her email dated 11 March 2021 and letter dated 22 April 2021 amounting to £2,945.02. The Ombudsman also concluded that a further payment of £100 is appropriate for the distress and inconvenience this has caused. The Ombudsman noted that he would typically award £500 in a situation like this. However, he recognised that Boal & Co has made very significant efforts to recover the money in dispute on Mrs S’s behalf from IIM and/or Utmost. This is what the Ombudsman would expect a good administrator to do in the circumstances. The Ombudsman considered that these steps to assist Mrs S resolve these issues should be recognised in this Determination by reducing the distress and inconvenience award the Ombudsman would otherwise award for non-financial injustice arising out of the maladministration.

In relation to Complaint 3, the Ombudsman concluded that the period of time taken to instruct Utmost to liquidate the portfolio was not unreasonable in the circumstances and did not amount to maladministration.

Full determination - Mrs N v Equilibrium Pensions Limited

Summary of determination

The Ombudsman received a complaint/reference of a dispute from a Mrs N (the Applicant) against Equilibrium Pensions Limited in relation to the non-payment of a death benefit under the Timber 2 International Pension Scheme (the 'Scheme') following the death of her husband (the Deceased Member).

Equilibrium Pensions Ltd was the trustee and manager of the Scheme and shall be referred to below as the Trustee. The Scheme is an international pension scheme established under IoM trusts and the Trust Deed and Rules provide that it shall be construed in accordance with the laws of the Isle of Man. It was set up so it could be approved under section 50B of the Income Taxes Act 1970 (Tynwald Statute) by the Assessor of Taxes in the IoM for the sole purpose of providing relevant benefits for the member.

Before accepting the case for investigation and determination the Ombudsman needed to reach a conclusion on the following two preliminary issues:

1. First, whether the Ombudsman had jurisdiction to investigate and determine the complaint - the Trustee’s position was that I do not have jurisdiction to determine the dispute as international pension schemes established in the IoM do not fall within the Pensions Ombudsman’s jurisdiction
   
   
2. Second, if the Ombudsman did have jurisdiction, whether he should accept jurisdiction or use his general discretion to decline jurisdiction

The Trustee’s position was that, if the Ombudsman does have jurisdiction to investigate and determine the dispute, he should use his discretion to decline jurisdiction as the IoM High Court is better placed to resolve the issues in dispute or bless a compromise agreement.

The Ombudsman concluded that he did have jurisdiction to investigate and determine disputes in relation to international pension schemes established under IoM trusts and approved by the Assessor of Taxes and authorised by the financial services authority. However, in the circumstances of the case it would not have been possible for the Ombudsman to determine all the issues which would need to be determined in order to determine the dispute. Accordingly the dispute would be more appropriately dealt with by the IoM and/or South African courts which were better placed to consider all relevant issues. The Ombudsman therefore decided to use his discretion not to investigate and determine the dispute.

Full determination - Mrs E v Lombard Bank

Summary of determination

Mrs E was employed in Douglas by Lombard Bank Isle of Man Limited (the Bank) (a subsidiary of the then named Lombard Bank now owned by RBS) during the period 1985/86 to 1991/1992. Eligible employees of the Bank were able to join the Scheme which was a non-contributory defined benefit occupational pension scheme contracted out of the Isle of Man State Scheme.

Mrs E contends that she was admitted to membership of the Scheme and is entitled to preserved benefits in the Scheme on ceasing to be employed by the Bank in March 1992. Mrs E approached the Trustees and Administrators of the Scheme on or about her 57th birthday to ask about her entitlement to benefits under the Scheme. However, neither the Trustees nor the Administrators have any record that Mrs E was a member of the Scheme under either her maiden or married name.

In order to determine this dispute the Ombudsman considered whether, on the balance of probabilities, Mrs E was admitted to membership of the Scheme and still has a preserved benefit in the Scheme. The burden of proof is on Mrs E to demonstrate that she was admitted to membership on the available evidence.

In most defined benefit schemes on leaving service members who are entitled to a preserved benefit in the scheme are issued with a leaving service statement setting out details of their preserved benefits but generally annual update statements are not issued each year in defined benefit schemes (unlike the position in defined contribution schemes). Mrs E does not have a copy of any leaving service statement and, given the elapse of time, has no other record that she was admitted to membership of the Scheme. Also the Scheme administrators have no evidence that she was a member of the Scheme which in itself indicates that she may not have joined or had vested benefits in the Scheme.

After considering the available evidence including in particular that Mrs E still had a guaranteed minimum pension in the Scheme which indicated she had a deferred benefit (which would not have been the case if she had not been granted a preserved benefit or had been granted one and then transferred out), the Ombudsman concluded that Mrs E still had a preserved benefit in the Scheme.

The Ombudsman determined as a matter of fact and law that Mrs E is entitled to a preserved pension at date of leaving pensionable service and directed the Trustee to give Mrs E details of her options in relation to the preserved benefit.

Full determination - Mr N v Trustee of RBS International Pension Trust and Willis Towers Watson as administrator of RBS

Summary of determination

Mr N (the Applicant) complained that WTW (acting on behalf of the Trustee) provided inaccurate information about the value of his former spouse’s pension on three occasions. This information was used to value Mr N’s pension rights for the purposes of making a financial award following his divorce.

The Applicant considered that WTW should make good the shortfall in the expected pension credit granted to him or pay the costs of the Applicant applying to the IoM High Court to vary the terms of the settlement (to the extent this is legally possible).

The Ombudsman was satisfied that WTW had a duty to use reasonable skill and care in the preparation of the valuations used for the purposes of the divorce negotiations both to the Applicant’s spouse (as member of the Scheme) and to the Applicant as potential pension debit member. It was reasonably foreseeable that the valuation would be shared and the Applicant and the Applicant’s spouse would rely on the valuations for the purposes of the divorce negotiations. The Applicant however sustained no legal loss as a result of relying on the December 2021 valuation as the December 2021 valuation understated the estimated value of the CETV at this point in time. A subsequent fall in value in the CETV between December 2021 and the date of implementation of the pension share in October 2022 was due primarily to market movements, in particular a change in interest rates which impacted on the CETV figure and as a consequence of the manner in which pension sharing legislation operates in the IoM. Under the pension sharing legislation there is in practice likely to be a significant delay between the issue of the original valuation and the value of the pension debit rights at the date of implementation of the pension sharing order.

The Ombudsman concluded that WTW’s only duty in law was to:

1. Calculate the CETV and provide that to the Applicant’s spouse on request or the court if the court so requested it in accordance with the applicable legislation and its duty of care in negligence owed to the Applicant and the Applicant’s spouse
   
   
2. To calculate the pension credit correctly in accordance with the pension sharing order. WTW owed no duty in law to advise the Applicant of the risk that the CETV might change between the original CETV estimate used to for the purposes of determining the pension asset share split during the divorce negotiations and the date of the implementation of the order

The only legal loss the Applicant has sustained as a consequence of the delay in paying the correct transfer following the making of the pension sharing order was loss of potential interest. The Applicant is entitled to interest on the delayed shortfall of the CETV value paid of £21,977.11 to the date the top up payment was made on 20 April 2023.

The Ombudsman concluded however that there had been maladministration by WTW in providing inaccurate CETV quotations which initially underestimated the Applicant’s spouse’s pension and initially incorrectly calculating the pension credit to be granted to the Applicant on implementation of the pension share. This had caused the Applicant non-financial injustice (distress and inconvenience). The Ombudsman concluded that the proposed offer of £350 by WTW to address the Distress and Inconvenience sustained by the Applicant as a consequence of these acts of maladministration was inadequate and a figure of £500 was appropriate. To this extent the Ombudsman partially upheld the Applicant’s complaint.

Full determination - Mr T v (1) British Regional Airlines Group Pension Scheme (the Scheme) trustee (2) Mercer and (3) Pension Insurance Corporation (PIC) – The British Regional Airlines Group Pension Scheme (the Scheme)

Summary of determination

Mr T has complained, among other things, that as a consequence of failures in providing him with information about his estimated benefits at retirement under the Scheme, he was unable to transfer out his benefits within the three month guarantee period (Guarantee Period) offered by the Trustee. As a consequence he lost the opportunity to receive a transfer value of £510,133 and only received a transfer value of £443,885 (a £66,248 difference). Mr T also sought to be compensated for loss of investment return on the extra funds which should have been transferred which he estimates amounts to £7,524.

The Ombudsman was satisfied that:

1. There was maladministration and breach of a duty of care in negligence by both Mercer and PIC relating to the manner in which Mr T’s transfer were dealt with
   
   
2. Mr T sustained financial injustice as a consequence of this maladministration and/or financial loss as a result of a breach of duty of care in negligence
   
   
3. Mercer were primarily responsible for the loss Mr T sustained but PIC also has some joint responsibility
   
   
4. In terms of attribution of responsibility Mercer were 80% at fault and PIC were 20% at fault
   
   
5. Mercer and PIC should compensate Mr T for the financial loss he has sustained as consequence of the maladministration/breach of law in these proportions including the loss of investment return

Mr T also sustained non-financial injustice (distress and inconvenience) as a consequence of the actions or inaction of Mercer and PIC. In relation to the complaint against/dispute with the Trustee, the Trustee is ultimately responsible for the administration of the Scheme and supervising the actions of Mercer and PIC. However, in the circumstances of the case the Trustee (and its directors) were almost entirely reliant on their advisers to advise them how to deal with transfers in the buy-in period after the buy-in/buy-out policy had been purchased.

The Ombudsman directed, among other things, that within 14 days of the issue of this determination:

1. Mercer shall pay Mr T the sum of £50,198.28 (80% x 85% of £73,821); and
   
   
2. PIC shall pay Mr T the sum of £12,549.57 (20% of 85% of £73,821), for the financial loss sustained by Mr T

The Ombudsman found no evidence of any failure of supervision by the Trustee and accordingly did not uphold the complaint against the Trustee.

The Ombudsman also welcomed the steps taken by PIC to review their systems to minimise the risk of similar issues occurring in the future.

Full determination - Mr T v Equilibrium

Summary of determination

This dispute concerned whether Mr T had a right under the Rules of the Sandvick Fund to take his benefits on ceasing to be employed with Sandvick Ghana and being re-employed by Sandvick Indonesia which was not a participating employer in the scheme. The Ombudsman concluded that under the wording of the rules Mr T did have a right to take his benefits under the Sandvick Fund Rules. The Trustee and Manager of the Sandvick Fund has concluded incorrectly that Mr T needed the consent of his former employer under the rules to take his benefits. Mr T did have a right to take his benefits.

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

1. 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
   
   
2. 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:

1. 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
   
   
2. 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.

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:

1. 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
   
   
2. 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.

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.

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:

1. 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
   
   
2. 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:

1. RL360 had procedures and controls in place to obtain the required client declarations from the Trustee and
   
   
2. 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:

1. The complaint was out of time
   
   
2. 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
   
   
3. The Pensions Ombudsman has no power to investigate the complaint as it relates to a pension scheme governed by Guernsey trusts and
   
   
4. 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.

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.

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:

1. Boal & Co as trustee and manager of the Scheme owed him a duty of care in relation to the appointment of the investment adviser
   
   
2. 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
   
   
3. 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
  
  

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:

1. That the level of charges levied by Fedelta could not be justified by the work done and
   
   
2. 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.

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:

1. 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
   
   
2. 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
   
   
3. 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

1. 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
   
   
2. 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
   
   
3. 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
   
   
4. 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.

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:

1. 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
   
   
2. 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:

1. 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
   
   
2. 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
   
   
3. 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
   
   
4. Certain elements of the complaint were out of time and it was not reasonable to extend the time for considering them

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:

1. There was maladministration resulting in distress and inconvenience. Mrs D’s retirement plans were substantially disrupted
   
   
2. 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.

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:

1. 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
   
   
2. 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
   
   
3. 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
   
   
4. 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.

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 60^th 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).