Pensions Ombudsman  

Pensions Ombudsman criticises arrangement with Fos

Pensions Ombudsman criticises arrangement with Fos

Pensions Ombudsman Anthony Arter believes the current overlap with the Financial Ombudsman Service should be addressed as it is ‘confusing and not satisfactory'.

In a hearing at the Work and Pensions select committee yesterday (June 8), Mr Arter was asked by Conservative MP Desmond Swayne to comment on concerns around the separate but overlapping jurisdictions of the Pensions Ombudsman and the Fos. 

In response, Mr Arter pointed to the different standards used and powers held by the two bodies, with the Pensions Ombudsman making decisions on a judicial basis due, in part, to the potentially huge sums of money involved in its determinations, which can often amount to tens of millions of pounds.

The Fos makes decisions on a subjective “fair and reasonable” basis, and is limited in the amount of money it can award, currently to £355,000.

“To merge the two, you’d have to decide whether pensions are now going to be dealt with across the board… on a subjective basis, or you’re going to say to the Fos that everything is judicially based,” he said. 

“They did try and merge the two back in 2013/14 and it failed. There was no saving and it was too complex in terms of the different jurisdiction and the different bases of the two bodies.”


But there are overlaps as some complaints can be decided by both bodies.

FTAdviser reported late last year on the warning made by Hazel Hobbs in a review of the Pensions Ombudsman published by the Department for Work and Pensions when she warned the overlap was ripe for abuse, with interested parties taking their complaint to whichever ombudsman they thought more likely to rule in their favour.

Mr Arter said following the passage of the Financial Services and Marketing Act in 2000, which had empowered the Fos to look at pension complaints, a memorandum of understanding was agreed between the two bodies clearly delineating what would be adjudicated on by which. 

“If the complaint dealt with an administrative issue, or some problem after [the personal pension scheme] was established, then it would be dealt with by the Pensions Ombudsman. If it was to do with the marketing or the financial advice given, naturally it would be dealt with by the Fos,” he explained.

That “very sensible” memorandum was undone, Mr Arter said, when the Fos decided it was unable to uphold the distinction, with the result being a new memorandum of understanding drafted by the Fos that Mr Arter eventually signed “not very happily”.

“So now you have this overlap,” he said. 

“The same complaint can be decided either on a subjective basis or on a judicial basis, and there could be a different outcome. That is very confusing and is not satisfactory.”

“I do think it’s something that should be addressed,” he added. 

The Fos has been approached for comment.