In this update we take a look at legal developments affecting SIPPs and SSASs over the past few months, including Pensions Ombudsman and Financial Ombudsman decisions that are particularly relevant to SIPPs and SSASs, and the implications for pension schemes of the latest ICO guidance on data protection issues.
The Pension Schemes Bill has been reintroduced in Parliament following the general election. The Bill includes a power to make regulations requiring trustees to make extra checks, such as requiring evidence of a member's employment, before paying a transfer value. It also provides the framework for a "pensions dashboard". In December 2019, the law on civil partnerships changed to make such partnerships available to opposite sex couples as well as same sex couples. For more information on the Pension Schemes Bill and the changes to civil partnerships law, click here.
If a member misses out on an investment opportunity due to a delay in processing his transfer value, are the scheme trustees liable to compensate him? This was the issue before the court in Tenconi v The James Hay Partnership in which the court held that the Pensions Ombudsman had set too stringent a test in requiring the member to show precisely how he would have invested his fund. Click here to read more about this and other recent cases, including recent First-Tier Tribunal decisions on HMRC's efforts to tax members for unauthorised payments, plus the latest developments in relation to the Berkeley Burke case following the insolvency of Berkeley Burke SIPP Administration Limited.
The FCA section of our update covers:
- the FCA's findings and proposals regarding effective competition in non-workplace pensions;
- the extension of the remit of Independent Governance Committees to include environmental, social and governance policies and a new duty to oversee the value for money of drawdown investment pathways;
- the FCA's evaluation of the Retail Distribution Review and the Financial Advice Market Review;
- the final rules on "investment pathways" for non-advised drawdown customers;
- changes to the rules on "wake-up packs";
- guidance on the fair treatment of vulnerable customers;
- final rules on the extension of the Senior Managers & Certification Regime; and
- the FCA's Policy Statement and final rules on switching investment platform providers.
What happens if a SIPP's T&Cs don't allow the holding of unlisted shares, but a SIPP acquires a right to claim such shares by virtue of an existing investment? If a SIPP administrator fails to deduct an administration fee for four years, is it entitled to deduct four years' worth in one go? For the Financial Ombudsman's conclusions on these and other issues, see the Financial Ombudsman section of our Update.
If a member transfers to what turns out to be a scam arrangement, when will the Ombudsman hold the transferring scheme responsible? Is a SIPP operator entitled to levy an annual management charge where the scheme's investment is worthless? How far is a SIPP operator required to go to demonstrate that fund values produced by its software are correct? Are schemes required to warn members about possible loss of protection against the lifetime allowance? In the Pensions Ombudsman section of our Update, we take a look at some recent Ombudsman determinations showing the approach that the Ombudsman has taken to these issues.
In the HMRC section of our Update, we look at Pension schemes newsletter 109 on relief at source for Scottish taxpayers and also consider the implications of the Fifth Money Laundering Directive for pension schemes.
The Pensions Regulator section of our update looks at the changes to the Regulator's guidance on DB to DC transfers to address how trustees should check that a member has received "appropriate independent advice" following changes which mean that most financial advisers will no longer be included in the FS Register. We also cover the Regulator's announcement that it expects to combine the contents of its current 15 codes of practice into a single, shorter code.
In the ICO section of our update, we consider the implications for pension schemes of the ICO's guidance on "special category" or "sensitive" personal data such as data concerning an individual's health. We also cover the ICO's draft "right of access" guidance which deals with an individual's right to make a data subject access request in relation to his/her personal data.