Personal Pension  

Ombudsman tells provider to pay for ‘maladministration’

Ombudsman tells provider to pay for ‘maladministration’

The Pensions Ombudsman has upheld a case brought against the Scottish Life Income Drawdown Plan after it underpaid the transfer value that was due and also sent the complainant a number of erroneous statements over the years.

Reynold Finney’s complained that Scottish Life had provided him with incorrect policy valuations, therefore he argued the provider should honour the value they had led him to believe that he had since 2008.

However, while the complaint was upheld, deputy pensions ombudsman Jane Irvine noted that Mr Finney has no entitlement to a transfer value greater than that which was available under the plan.

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The plan commenced in 2001 and was in drawdown for some time. In August 2003 an income payment of £1,750 was made, but had not been correctly accounted for in the value.

In early 2013 enquiries were started by Mr Finney and his financial adviser in relation to a transfer to Alliance Trust, completed in May that year for £385,918.

The financial adviser raised a query over the final value paid shortly thereafter, and Scottish Life discovered that the income payment of £1,750 was not deducted leading to the amounts that Mr Finney had been quoted being overstated.

Mr Finney complained in June 2013, arguing that a missed income payment did not justify the reduction to the expected transfer value and querying whether every annual valuation for the last ten years had been incorrect.

He asked that they honour a transfer value of at least £390,441 and issue a further £4,523 to Alliance Trust.

Scottish Life stated they did not think that the income payment had impacted on his subsequent investment decisions.

However, Scottish Life conceded that the level of service provided fell short and offered £200 for any distress and inconvenience which may have been caused.

In summarising Mr Finney’s position, Ms Irvine stated that by providing him with inaccurate values since 2003, Scottish Life made it impossible to know what the value of the plan was. As a consequence, Mr Finney may have altered his investment, Ms Irvine said.

“Also if pension firms were not held accountable for their actions then there was no incentive for them to improve their administration systems.”

The deputy ombudsman stated that Scottish Life’s communications had been below par.

“Of course the error itself amounts to maladministration. But I also view the failure to bring this issue to the policyholder’s attention as an additional instance of maladministration,” stated Ms Irvine.

Scottish Life has 28 days from the time of the determination on 19 December, to arrange a further payment to Alliance Trust for the sum of £2,675 plus interest calculated at the base rate for the time being quoted by the reference banks for the period from 7 November 2014 up to the date of the payment.

“Also within 28 days of this determination Scottish Life will pay to Mr Finney £400 for the distress and inconvenience caused,” Ms Irvine added.