Ombudsmen reach deal on pension complaints

twitter-iconfacebook-iconlinkedin-iconmail-iconprint-icon
Search supported by
Ombudsmen reach deal on pension complaints

The Pensions Ombudsman and the Financial Ombudsman Service (Fos) have clarified the scope of their respective remits on pension complaints.

With an updated version of their “Memorandum of Understanding” the organisations sought to improve their co-operation and information sharing on those complaints.

They said they want to ensure people bringing complaints are directed to the right body so their case can be addressed properly and promptly. 

The Pensions Ombudsman and the Fos have jurisdiction over different areas of pension matters, albeit with some overlap.

In the main the Pensions Ombudsman deals with complaints about the administration or management of pension schemes, while the Fos investigates complaints about the advice received when taking out a pension. 

Fos can also help with some complaints about the administration of personal pension schemes but not of occupational schemes.

A considerable difference between the two is the award they can order a firm to pay out. 

While the Pension Ombudsman has no upper limit to the compensation it can award, the Fos is restricted to a maximum of £150,000, though it can recommend a firm pay out more.

With both organisations decisions can be challenged in court as long as they have not been accepted prior.

According to the memorandum, complaints brought to either service will be directed to the other if they fall outside of the former’s jurisdiction.

This can also happen if the potential redress limit is above the limit the Fos can award.

Any referral has to receive the complainant’s consent. Should they not agree the complaint can be dealt with in the usual way or dismissed, the agreement said.

Pensions Ombudsman Anthony Arter said: “We have been working with the Financial Ombudsman Service to review the language used in the memorandum of understanding, to help make it clearer for customers.

“This important document should ensure that the customer is aware where they can go to when they need help to resolve their pension complaints.”

In the past some complaints were brought to both organisations, particularly with regards to pension transfers out of defined benefit schemes, and often the results were different.

Tenet, which has experienced a case where the complaint went to both bodies with different outcomes, welcomed the clarification.

Group risk and regulatory director Caroline Bradley said: “Tenet has a good relationship with Fos and we have regular conversations about general issues relating to service and claims.

"We welcome moves to bring similar services together. We understand Fos also meets with the FSCS and Tenet believe a similar arrangement there would be beneficial.”

The new agreement between the Fos and Pensions Ombudsman will be assessed for its effectiveness in 12 months’ time, the organisations said.

Meanwhile, the Financial Conduct Authority has launched a consultation on changes to its rules for authorised firms in respect of signposting consumers to both ombudsmen.

The organisations' remits as defined in the memorandum signed on 1 December 2017 are:

The types of complaints the Pension Ombudsman considers

  • Auto enrolment;
  • Failure to provide information/act on instructions;
  • Misquote/misinformation;
  • Pension liberation;
  • Transfer: general;
  • Ill health;
  • Benefits: incorrect calculation/refusal/failure to pay or late payment/pension increases;
  • With-profit issues;
  • Fund switches;
  • Guaranteed Annuity Rate;
  • Death benefits;
  • Charges/fees;
  • Interpretation of scheme rules/policy terms; and
  • Winding up.

Complaints the Fos will consider

  • advice to take out a personal pension - including group personal pensions, stakeholder pensions, self-invested personal pensions or free-standing additional voluntary contributions;
  • advice to transfer from a defined benefit occupational pension scheme to a personal or other defined contribution pension scheme;
  • advice to someone with a personal pension to take out an annuity or go into drawdown;
  • advice on investments in self-invested personal pension plans, executive pension plans or small self-administered pension schemes;
  • advice about the management of a personal pension portfolio under, for example, a discretionary management agreement;
  • advice on taking out an annuity or section 32 buy-out policies where the buy-out is in the individual consumer’s name; and
  • the administration of a personal pension scheme, including self-invested personal pensions, group personal pensions and annuities in payment.

carmen.reichman@ft.com