James Hay has had its payout on a pension transfer delay increased significantly after the High Court ordered the Pension Ombudsman to revisit its original decision.
The client appealed the Pension Ombudsman’s first decision after arguing that the compensation awarded was too low in comparison to his losses, after James Hay had caused a delay on his pension transfer.
But when the High Court remitted the decision back to the Ombudsman the compensation bill rocketed from the initial £2,000 to £43,700.
The problem first arose when Mr T looked to transfer his small self-administered pension to a self-invested personal pension.
He had cash and stocks with Barclays Stockbrokers (BSB) in his Ssas as well as £220,000 in cash, but emailed James Hay to begin the transfer on March 24, 2016 after BSB notified him that it would be closing its pension trader accounts from June 30, 2016.
While telling James Hay the transfer must be done before this closure, Mr T also made it known that he wanted the transfer to go through before the June 23 Brexit referendum.
This was not achieved and instead, on August 19, £250,000 in cash was transferred from James Hay to Mr T’s new Sipp with Hargreaves Lansdown.
A week later, six out of seven lines of stock were transferred in-specie to the new provider with the final line being transferred on October 3.
As a result of these delays, Mr T argued he had lost the opportunity to invest in the stock markets immediately following the Brexit referendum result, causing him to lose out.
James Hay argued it had carried out its duties in a satisfactory manner within acceptable timescales, though it accepted that there were two exceptions relating to miscommunication.
In its 2108 decision, the ombudsman concluded there had been maladministration from James Hay and set the compensation level at £2,000.
Ombudsman Anthony Arter stated: “In not completing the cash transfer sooner, and within a reasonable time, I accept that this maladministration by James Hay effectively caused Mr T to miss the opportunity to invest in the stock market, either before or immediately following the Brexit referendum and I do understand Mr T’s frustration.
“However, unfortunately, the loss that Mr T is claiming, is neither measurable nor the exact nature of his investment within the reasonable contemplation of the parties.”
But Mr T appealed to the High Court arguing the compensation awarded was not enough and that the ombudsman should take into account what would have happened if this maladministration had not taken place.
The court remitted the decision back to the ombudsman saying it should identify the date by which the money should, on the basis of James Hay acting without maladministration, have arrived.
Once this conclusion has been reached, it should then consider what Mr T would have done with the money had it arrived by this date.
In his second findings, Mr Arter concluded the money should have arrived by June 23. He then agreed that Mr T would have invested the full £250,000 in the FTSE 100 Index immediately after the leave vote and concluded the losses were much higher than initially thought.