Pensions Ombudsman service: impact of Covid-19
In a statement on its website, the Pensions Ombudsman's office says that due to all its staff working remotely, it is currently only able to accept online applications and e-mail enquiries and cannot accept post. The statement also warns that it may take the Ombudsman longer than usual to deal with complaints and enquiries.
Compensation for investment delay calculated on model portfolio basis
In the case of Mr N (PO-25541), the Pensions Ombudsman based an award for investment losses on a financial adviser's model portfolio basis, having concluded that an award based on the Bank of England base rate would not provide appropriate redress.
The facts that led to the investment delay were quite specific to the particular case, but ultimately the Ombudsman concluded that Mr N's financial advisers were responsible for losses caused by the member's fund being left in cash during a period when the member had intended for the fund to be invested after his advisers had completed an assessment of his attitude to risk and recommended a specific investment account.
The Ombudsman said that until recently his stance in cases where he directed redress for financial loss had been to award interest at the Bank of England base rate. However, on reflection, he was not satisfied that this was appropriate redress for investment loss, particularly given that base rate had been below inflation for some considerable time. Such an approach would also not reflect the fact that the member had approached financial advisers and paid for advice in order to invest in something other than cash. A financial adviser would not realistically recommend an individual invest an entire portfolio in a fund that only provided base rate levels of return. The Ombudsman therefore directed that compensation should be based on the investment return that would have been achieved had the member's fund been invested in line with the financial adviser's model portfolio recommended in its advice.
This Ombudsman determination pre-dates the Covid-19 pandemic, but the market volatility resulting from the pandemic is likely to throw into sharp focus the question of the basis on which compensation is calculated in circumstances where members' investment instructions are not actioned promptly.