Liberation complaint upheld but legal action likely

The Pensions Ombudsman has upheld a complaint against a pension liberation firm for failing to comply with a transfer request, but has warned the claimant may need to take legal action to attempt to recover his fund of around £350,000 initially switched from a final salary scheme.

In what is an exceptional case compared to a number of others sitting with the ombudsman, the consumer is not complaining about the initial transfer from his NHS Scotland scheme to the liberator, Capita Oak, but rather about the latter’s failure to respond to a subsequent transfer out request.

Other complaints regarding liberation are generally either about life companies and providers not complying with transfer requests on the grounds that it could be a pension liberation vehicle, or in some cases that they have allowed such a switch without sufficient checks.

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The consumer had a defined benefit scheme with NHS Scotland equating to around £367,000. He authorised The Pension Specialist, a former authorised representative of Douglas Baillie until 2011, to act on his behalf to obtain information about this pension.

Pensions ombudsman Tony King said: “Nothing turns on them because the giving of advice in relation to occupational pension schemes, such as the NHS Scheme and (apparently) the Capita Oak Scheme, is not a regulated activity”.

He gave the go-ahead to opt out of the NHS Scheme and signed a declaration that he was aware of the implications of transferring to a UK non-contracted out DC scheme. He was also given a pension liberation fact sheet and the fund was transferred in March 2013.

He was told that his investment in the Capita Oak Scheme would be a self-storage firm in the north of England that was offering an 8-12 per cent return. He received a “non-repayable loan” of £17,500, and a 5 per cent initial charge of £18,380 was deducted from the transfer value.

Less than four months later, the claimant wrote to the trustee, Imperial Trustee Services Ltd, stating he wished to transfer out in August 2013. The firm did not respond to his calls or letters, which Mr King described as “maladministration”, stating the member would have made a full transfer request if he had not been ignored.

ITSL also did not respond to the ombudsman.

Mr King directed ITSL to repay the higher value, transferring the pension to a named scheme at the cash equivalent transfer value at 30 September 2013, plus simple interest or the correctly calculated cash equivalent transfer value at the date of payment.

However, he said: “I make that direction without any great confidence that it will be complied with immediately.

“If ITSL do not comply, Mr X may attempt to enforce the direction through the courts, but sadly even if ITSL respond he may find that some or all of the money is no longer there.”