The Ombudsman has applied the standards of the Pensions Regulator's 2013 pension scams guidance, which included the "Scorpion" warning leaflet, when considering the level of checks that a scheme administrator should have carried out before processing a transfer in April 2015 (Mr N CAS-48914-L5F3). 

This update covers the legal position in England and Wales. 

The Ombudsman did not uphold the complaint made by the member, who lost approximately £50,000 as a result of transferring his pension fund to a scheme which turned out to involve a scam.

The transferring scheme's administrator had received evidence that the receiving scheme was registered with HMRC.  The scheme had been registered in June 2014.  The Ombudsman accepted that this was long enough prior to the transfer for the scheme not to be regarded as a newly established scheme (one of the warning signs flagged in the Regulator's guidance).  Other warning signs flagged in the guidance at the time were: no member copy of documentation; attempts to speed up the transfer; an overseas receiving scheme; and members being offered early access to their pension fund.  The Ombudsman accepted that none of these warning signs were present in relation to Mr N's transfer, and that the checks made by the transferring scheme's administrator met the standards set out in the Regulator's guidance at the time.

The Ombudsman said that, in the absence of any indication of why the transfer value should not go ahead (eg indicators of pension liberation fraud) the transferring scheme trustee was under a statutory duty process the transfer. The Ombudsman acknowledged that it was not clear whether Mr N had received a copy of the Scorpion leaflet from the transferring scheme, but noted that Mr N had confirmed that he had received a copy from another source.

Our thoughts

This determination reflects the Ombudsman's approach of judging transfer values checks by reference to accepted standards at the time.  One point mentioned by the Adjudicator at the Ombudsman's office was that the transfer was made approximately one month after the Pension Scams Industry Group published its code of good practice on combating pension scams.  The Adjudicator noted previous determinations in which the Ombudsman had taken the view that a three month period was a reasonable time in which to implement new standards.  More recently the Ombudsman has said that one month is a reasonable timeframe for putting in place new checks to comply with Regulator guidance, but this point was not mentioned by the Adjudicator or the Ombudsman in this determination.

Under the law as it now stands, the absence of an "employment link" between a member and receiving (occupational) scheme would be an "amber flag" meaning that the transfer cannot proceed without the member taking scams guidance.