Aegon ordered to pay £20k redress over transfer delay
Pensions Ombudsman finds against insurer after transfer “needlessly” delayed against ABI guidelines.
Aegon has been ordered to pay almost £20,000 in compensation to a former customer after the Pensions Ombudsman ruled that a ‘needless’ delay in administering his pension transfer led to him missing an investment opportunity.
The Ombudsman’s decision, published on the service’s website, ruled that Aegon delayed the payment of a clients’ funds from its own self invested personal pension, administered by Capita, into an IPS Partnership vehicle.
The company has therefore been instructed to pay £19,761 into the client’s IPS Sipp, to which “simple interest” will be added at the reference bank rate from 5 September 2011 to the date of payment.
The client, Mr J A Thomas, contacted IPS to transfer £500,000 of his fund into a National Savings and Investments bond with a fixed interest rate of 4.25 per cent per year.
According to the decision, Aegon instructed Capita on 10 November to disinvest the assets held in the portfolio. Capita in turn relayed the instructions to Aegon Ireland, who dealt with the Aegon International Investment, on 20 November.
However, Aegon employees were said to be unable to find his policy documents.
Due to the delay, Thomas’ instructions were not completed until 15 December. The NS&I bond had already been withdrawn on 27 November.
The Ombudsman stated that Aegon had a “duty” to pay the transfer value within a reasonable period of time, adding that the ABI’s good practice guidance on pension transfers suggests ten working days as a suitable timescale for completion.
The Ombudsman stated that the time taken by Capita and Aegon Ireland to carry out the two “straightforward tasks” of forwarding the transfer discharge instruction form with details of the correct number obtainable from its records and relaying disinvestment instructions was “excessive”.
The ombudsman said: “In my opinion, at most four working days to undertake these two tasks should have been sufficient.
”Further if Aegon had not lost the Portfolio policy documents, it would have been unnecessary for Aegon Ireland to ask for the completion and return of a lost policy declaration, which delayed the transfer by a further five working days.”
The Ombudsman said that, in light of these failures, it is “likely” that Aegon Ireland would have been in a position to settle the plan transfer at least seventeen working days earlier, leaving “ample time” for IPS to carry out the NS&I bond purchase.
He said: “I consider that the amount of compensation that Mr Thomas is seeking from Aegon as lost interest reasonably represents his loss.”
However, the Ombudsman did not feel that Aegon’s service was so “poor” that Mr Thomas was entitled to a refund of all the changes that the plan incurred after the date on which the NS&I bond was withdrawn.