In his determination in Mr N (PO-8048) the Pensions Ombudsman has held that the administrator of a transferring scheme committed maladministration by failing to carry out appropriate checks and failing to issue the Regulator's 'scorpion' leaflets.


Mr N received a cold call, persuading him to transfer his Principal Civil Service Pension Scheme (PSCSPS) benefits to another scheme (the Brookes Scheme). On receipt of a transfer application, the PCSPS administrator (MyCSP) referred to a 'Transfer Watch List' which set out suspected pension liberation schemes. The Brookes Scheme did not appear on the list and the PCSPS made the transfer on 27 August 2013. After the transfer, Mr N had second thoughts and contacted the Brookes Scheme. He was told he would have to wait a year before transferring out. After waiting a year, he contacted the scheme's administrator, only to find out it had been dissolved. Mr N was also unable to contact the Brookes Scheme's trustee. He subsequently contacted MyCSP asking to undo the transfer, but was informed that was not possible. Mr N managed to pursue a claim against the company in which the monies transferred to the Brookes Scheme had been invested. He was repaid the transfer value by that company, but still pursued an Ombudsman's complaint against the MyCSP and the trustee of the Brooke Scheme. 

On 14 February 2013, the Pensions Regulator had issued a press release aimed at pension schemes and members, warning of the potential risk of pension scams. The Regulator said that additional checks should be carried out by administrators such as seeing whether the receiving scheme was newly registered, whether it was sponsored by a newly registered employer and whether it was connected to an unregulated investment company. It also said schemes should issue 'scorpion' branded leaflets to members wishing to transfer to warn them of pension liberation fraud.

The Ombudsman held that MyCSP should have carried out the checks advised by the Pensions Regulator. (MyCSP said it had not sent scorpion leaflets to Mr N as it had received copies of scorpion leaflets signed by Mr N as part of the transfer documentation.) The Ombudsman held that MyCSP bore some responsibility for the stress suffered by Mr N during the period when he was pursuing the pension transfer monies. It ordered MyCSP to pay Mr N £500 for its failure to complete the additional checks. The trustee of the receiving scheme, who had not responded to any enquires, was ordered to pay £2,000 to Mr N and reported to the Pensions Regulator.

Comment

The Ombudsman's determination underlines that when considering whether a transferring scheme has committed maladministration by giving effect to a member's request to transfer to a scheme that turns out to be a scam, the Ombudsman will attach considerable importance to the question of whether the transfer occurred before or after the Pensions Regulator's press release about pension scams.

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