The Pensions Ombudsman has found in favour of Hargreaves Lansdown in a case involving a family dispute over whom death benefits should be paid out to.
Jacqueline Barnicoat complained that Hargreaves Lansdown Asset Management failed to exercise their discretionary power to award the death benefits available from her partner Alan Bunn’s Vantage self-invested personal pension to her on a timely basis.
She also claimed to have suffered significant financial loss and considerable distress as a consequence of the delayed decision.
However, ombudsman Anthony Arter said the complaint should not be upheld because Hargreaves was justified in reaching the decision. “In my view, the time taken by HLAM to decide that Mrs Barnicoat should receive the death benefits available from the Sipp, was consequently, not unreasonable.”
The case stems from Mrs Barnicoat’s partner Mr Bunn’s death on 14 September 2012. Mr Bunn had two adult children from a previous marriage. He had completed an expression of wish form in March 2012 nominating Mrs Barnicoat to receive the benefits payable from the Sipp on his death at the discretion of Hargreaves.
However, the executors of Mr Bunn’s estate were his two children and according, to his will, Mrs Barnicoat was not a beneficiary of his estate.
In order to assist Hargreaves decide who the recipient(s) of the death benefits should be, Mr Bunn’s children sent information about the family circumstances.
It was their view that Mrs Barnicoat’s relationship with Mr Bunn had broken down prior to his death, so they asked Hargreaves for more time to investigate their father’s financial affairs and the circumstances surrounding his death; deferring the decision until after they could submit more evidence.
After much back and forth, on 1 March 2013 Hargreaves made Mrs Barnicoat the sole beneficiary of the death benefits from the Sipp, apologising to her for the delay and for not keeping her updated on what had been happening.
In a letter that October, Hargreaves informed Mrs Barnicoat that: “Unfortunately there are occasions when the distribution of pension death benefits can be complex and time consuming.”
Another letter the following month noted that HM Revenue and Customs allowed them a maximum of two years to determine the most appropriate Sipp beneficiaries following the death of Mr Bunn and they were satisfied this timescale has been met.
Mrs Barnicoat transferred the Sipp to Just Retirement in February 2014, using part of her capped drawdown pension plan fund to initially provide an income.
However, the delays attributable to Hargreaves in awarding her the death benefits resulted in the amount of income available to be lower than what it would have been had the delays not occurred due to falling annuity rates.
She complained that it was unfair and unreasonable of Hargreaves to “side” with Mr Bunn’s children and that Hargreaves allowed them too much time to provide further evidence.
Hargreaves said that the delay in paying benefits to Mrs Barnicoat arose because they were provided with a large amount of information from Mr Bunn’s children which they had to take into account before making their decision.
The firm accept that there was an initial period during which they failed to keep Mrs Barnicoat adequately informed of what was happening and offered her a compensation payment of £500 for the distress and inconvenience caused to her, adding that there was regular contact with Mrs Barnicoat thereafter.
In Mr Arter's conclusions he said that the definition of who might be a beneficiary may be cast very widely, making it difficult for the trustees to ascertain all the potential beneficiaries or to be aware of the needs and financial status of all of them.
“The Sipp rules define a range of people who could benefit, but HLAM are not bound to consider them equally and can use their discretion to determine the beneficiaries. In doing so they must consider all relevant facts but ignore anything which is irrelevant.”
He did not consider it unreasonable for Hargreaves to allow Mr Bunn's children additional time to conclude their private investigation. Mr Arter also rejected the claims of suffering financial loss, pointing out that if someone suspects they may have suffered a loss, they have a responsibility to take reasonable steps to mitigate this.
“Furthermore, given that Mrs Barnicoat was eventually awarded the death benefits from the Sipp, with the interim payment she would have been able to reinstate her savings which she had used to cover her day to day expenses,” he explained.
“I can fully understand the frustration which Mrs Barnicoat experienced on the time it took for HLAM to make their decision, but I do not consider that she has suffered any actual financial loss for which HLAM should compensate her.”
peter.walker@ft.com
