Regulation  

Ombudsman to get ‘proactive’ on court appeals

Ombudsman to get ‘proactive’ on court appeals

The Pensions Ombudsman Service will take a more “proactive” approach to court appeals against decisions it has made, after the Hughes versus Royal London ruling set a new precedent on pension transfers.

In a decision backed by the Department of Work and Pensions, the ombudsman Anthony Arter will now take an active role in court appeals that have the potential to affect the broader pensions landscape, such as pension liberation and auto-enrolment.

In February, the High Court overruled a Pensions Ombudsman decision over whether or not Royal London was right to refuse a pension transfer request of Donna-Marie Hughes.

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The ombudsmen upheld Royal London’s decision on the grounds that the scheme Ms Hughes wanted to transfer into looked suspicious. But Ms Hughes took the issue to the High Court, and won.

Royal London’s legal adviser Ben Fairhead, of Pinsent Masons, said at the time: “It will now be far easier for individuals to move their money from legitimate schemes, ultimately leading to a potential influx of money into suspicious schemes, as the hands of those being asked to make transfers are increasingly tied by the inflexibility of the law.”

A statement from the Pensions Ombudsman Service on Wednesday (27 July) read: “Our practice of looking to intervene will now be extended beyond participating in an appeal which raises questions affecting our legal jurisdiction or internal procedures.

“Our participation will be more pro-active and will be considered against the backdrop of seeking to assist the court.

“Examples of increased participation may include where the decision could have a wider impact on the pensions industry, such as pension liberation or auto-enrolment, or where there is a significant concern over access to justice and participation is necessary to properly present and argue the points – the Principle of Equality of Arms.”

Claire Ryan, legal director at the Pensions Ombudsman Service, said the decision was supported by the Department of Work & Pensions, adding: “We believe that the pensions industry and parties to complaints will welcome the change.”

Self-invested personal pension provider AJ Bell welcomed the move.

“The ruling in the Hughes vs Royal London case risks undermining the fight against pension liberation. That is a fight that should involve the entire pensions industry, including the ombudsman,” AJ Bell’s senior analyst Tom Selby said.

However, he added much more could be done, including “revisiting the case” for banning cold calling.

Darren Cooke, a chartered financial planner at Red Circle Financial Planning, said the High Court ruling in the Hughes versus Royal London case set a “dangerous precedent”.

“Other pension companies will look at that judgment and just decide to pay,” he said.

However, he said the Pensions Ombudsman Service’s rulings tended to be “spurious”, and doubted its decision to take a more proactive approach would make much difference.

He said the key to tackling pension scams was at the regulatory and law-enforcement level. He said banning cold calling and increasing funding for policing fraud would be a start.