The Pensions Ombudsman has rejected two similar complaints by the same member against two different pension providers who processed the member's request to take a transfer value to a small self-administered scheme (SSAS) in 2013, shortly after the Pensions Regulator had published its guidance on pension liberation fraud setting out increased levels of due diligence required of trustees and administrators when processing a transfer request (Mr Z PO-27889 and PO-27901).
The member's funds were lost or misappropriated following the transfer and the member complained that the pension providers should have carried out increased due diligence. In support of his claim, the member also pointed out that two of his four pension providers refused to carry out the transfer as they had concerns about the SSAS.
Both transfers had taken place in early March 2013. The Pensions Regulator's guidance had been published on 14 February 2013. Both pension providers argued that they had acted in line with industry practice at the time, which was to check that the receiving scheme was registered with HMRC. One of the providers said that it had also checked that the receiving scheme was not on its own internal "watch-list" and had previously warned the member that arrangements offering access to a pension before age 55 could give rise to unauthorised payments and a large tax bill.
The Ombudsman noted that the transfers had taken place after the Regulator had issued its guidance, but he deemed it reasonable to allow the providers the necessary time to implement any changes arising from this. The Ombudsman said that, in line with previous determinations, he considered a 3 month period from 14 February 2013 a reasonable timeframe in which to do so. According, he held that the two providers had not failed in their due diligence obligations at the time of the transfer and did not uphold the complaint.
It has been clear for some time that the Ombudsman views the Pensions Regulator's February 2013 guidance as being of great importance in determining what level of due diligence could reasonably be expected of a scheme asked to make a transfer value. These latest determinations give a helpful indication of the Ombudsman's approach where a transfer value was paid shortly after the guidance was issued.