A recent decision from the Pension Ombudsman - which determined that an appointed representative was liable for redress owed to a customer of its principal firm – has been branded unusual by a lawyer.
Harriet Quiney, partner and professional indemnity lawyer at DWF Law, also explained that such outcome wouldn’t be possible if the complaint had been made to the Financial Ombudsman Service, since the body can only make awards against authorised firms.
FTAdviser reported earlier this week that pension ombudsman Anthony Arter upheld a complaint from Ms D against Halebarns Financial Planning in February. She complained a delay in transferring her defined benefit pension to a personal plan with Royal London meant she received a transfer £25,321 lower than the original cash equivalent transfer value.
The process, which Mr Arter considered to constitute maladministration from the adviser firm, was conducted by the IFA Partnership, an appointed representative of Halebarns Financial Planning.
Since the principal firm entered into liquidation in April, IFA Partnership has now been ordered to confirm with Royal London the sum required to put Ms D in the same position as if the original transfer value of £415,106 had been paid into her chosen investment, rather than the £389,785 transferred.
Ms Quiney said: “While in claims involving appointed representatives it is customary to pursue the principal, as this is the entity which normally carries professional indemnity insurance, this case reaffirms the legal position, which is that appointed representatives are jointly and severally liable with their principals for their actions.”
She noted that the outcome of the decision “is quite unusual,” and it is something appointed representative firms “should be aware and think about”.
She added: “Although networks do go bust from time to time, it isn't hugely common for that to happen.”
Another particularity of the case is that the claimant wouldn’t be able to receive redress if she had gone to the Fos instead of the Pensions Ombudsman, as the former can “only make awards against authorised firms, and appointed representatives are not directly authorised,” she explained.
Generally, consumers can’t choose which ombudsmen to go to, but there are areas where their jurisdictions overlap, Ms Quiney noted.
The ombudsmen's remit overlaps mainly due to the relationship between pensions and investments - TPO deals with matters which concern the administration and management of occupational and personal pension schemes, including pension transfers, while the Fos deals predominantly with advice on individual pensions.
However, the Fos can also consider complaints about the administration of personal pensions and group personal pensions, which also falls under TPO’s reach.
Ms Quiney added: “It was fortunate that this was a Pensions Ombudsman matter, since the Pensions Ombudsman isn't so restrictive in terms of the class of people you can bring claims against.”
FTAdviser reported that consumers could manipulate the outcome and awards they receive from the ombudsman by choosing to bring their claim to the right one.