The Ombudsman has given directions requiring the independent trustee of a SSAS to ensure the SSAS trustees draw up a policy on managing conflicts of interest (PO-21173). 

The dispute before the Ombudsman involved a two member SSAS.  The two members had been married to each other, but their relationship had broken down and they had divorced.  As well as the two member trustees, the SSAS had a professional independent trustee.

One of the member trustees, Mr N, brought a complaint against the scheme's independent trustees and administrator (which were both companies within the same group) and the other member trustee (his ex-wife).  The complaint comprised a number of allegations.  These included: incorrect apportionment of scheme funds; a failure to call trustee meetings for a period of many years; a failure to report unauthorised payments to HMRC; failure to collect rent owed to the scheme, and failure to ensure that the accounts reflected rent due.  Two key fundamental issues behind the allegations were: (a) that a property owned by the SSAS had been occupied by the other member trustee, Mrs GF-R, or companies established by her and that rent had not been paid, and (b) that Mrs GF-R had not engaged with the issues raised by Mr N.

The Ombudsman found that some of the complaints raised by Mr N were out of time.  In a number of instances where there had been breaches of duty by the trustees, the Ombudsman found that Mr N was himself in breach (along with the other trustees) given that trustees had to act unanimously.  However, the Ombudsman sought to give directions which would achieve a resolution to the impasse.  The Ombudsman directed:

• that within 28 days of his determination, the independent trustee should ensure that the trustees drew up a policy on how to manage conflicts of interest, taking into account the Pensions Regulator's code of practice, ensuring a register of interests was compiled and explaining how any trustee would manage that conflict; and
• that if, within 28 days of drawing up the policy on managing conflicts of interest, the trustees could not agree a basis from which each member's share of fund could be derived, the trustees should use their best endeavours to agree on an expert to make a binding determination on the matter.  This was to be done under the clause of the scheme's trust deed and rules which provided for a binding determination by a unanimously appointed expert in the event that the trustees could not reach a unanimous decision on any matter.

Our thoughts

In some ways, the issues in this case were similar to the issues in the AB Produce SSAS case covered in the Pensions Regulator section of this update.  Whilst the facts of each case were different, the fundamental issue was that a breakdown in the relationship between member trustees had resulted in an absence of trustee decisions needed to operate the scheme in accordance with the trustees' duties.