It did not uphold a complaint against the administrator of a pension scheme, which had made pension payments to an unrelated person’s account based on the beneficiary’s inconsistent instructions.
Mrs Winifred Condell became entitled to a widow’s pension upon the death of her husband on 4 June 2005. On 3 July 2005, Mrs Condell completed a pension payment form to instruct Standard Life Assurance on the payment of her widow’s pension. On the form, Mrs Condell specified, among other things, the name and address of her bank (First Direct), the account holders’ names (Mrs Condell and her late husband) as well as the sort code and the account number. Mrs Condell also annotated the note by hand to specify that the account was the same bank account into which the administrator had been paying her husband’s pension.
But, as it transpired, the details she provided were completely different from her own account details and related to an unknown person’s account at the Halifax.
The administrator noticed the discrepancy on the form and wrote to Mrs Condell on 9 July 2005 confirming commencement of her pension payments. The letter requested that Mrs Condell
(i) Check the bank details as they differed from those of the account into which her husband’s pension had been paid; and
(ii) Contact the administrator if she needed to make any changes. In the absence of any response, the administrator commenced payment to the Halifax account specified by Mrs Condell and provided Mrs Condell with monthly pension payment advice letters confirming payments.
In March 2012, the administrator was notified by Mrs Condell’s daughter that the widow’s pension was being paid into the wrong bank account. The administrator began paying the pension instalments from April 2012 into Mrs Condell’s First Direct account and contacted the Halifax about the erroneous payments. The Halifax requested its account holder to contact the administrator, but the account holder did not comply. Within its rights, under data protection law, the Halifax would not provide the account holder’s details without a court order.
Mrs Condell’s position was that:
(i) She never received the administrator’s letter of 9 July 2005;
(ii) The administrator should have delayed payment or made payment by cheque pending her response;
(iii) The administrator should have sent a reminder when no response was received or should have used recorded delivery for a single letter; and
(iv) The administrator’s monthly pension payment advice letters did not specify the account into which payment was made.
The administrator did not accept liability for Mrs Condell’s pension being paid into the wrong bank account because:
(i) It had no reason to believe that the sort code and account details provided by her were not related to another bank account of hers;
(ii) It was not unreasonable to assume, in the absence of any response from Mrs Condell to its letter, that the bank details provided were correct; and
(iii) It was not necessary for it to delay payment pending such a response.
The ombudsman, noting that the administrator had an obligation to pay the pension, confirmed it was correct to treat the account details specified on Mrs Condell’s form (despite the inconsistency with her handwritten annotation) as her instructions for payment and that the onus of ensuring the form was completed correctly was on Mrs Condell. It was not, in the ombudsman’s view, the administrator’s responsibility to “put it beyond doubt” that there was no mistake “even though there was an inconsistency” and the administrator was entitled to assume Mrs Condell conducted her financial affairs with ordinary diligence (and would have quickly noticed lack of payments).
The ombudsman further noted that even if the administrator had been at fault, liability would have been limited to the first few payments (as opposed to nearly seven years’ worth) because only Mrs Condell was in a position to know beyond question that the payments were going astray.
Danny Tsang is a pensions partner of City law firm Simmons & Simmons