The Ombudsman held that a complaint against Optimum Capital Ltd (“OCL”) should be upheld because it failed to process Mr Philippe Pollet’s transfer request in reasonable time which caused him financial loss.
The Optimum Internal Pension Plan (the “Plan”), a money purchase occupational pension scheme, was provided by OCL which acted as both principal employer and a trustee. The set-up of the Plan was outsourced to Tudor Capital Management Ltd (“Tudor”) which was also appointed as another trustee and as the scheme administrator. In April 2010, following the institution of criminal proceedings by HMRC, the Pensions Regulator suspended Tudor from acting as trustees. Tudor was consequently removed in August 2010 as a trustee of the Plan and in February 2012 OCL removed Tudor as the scheme administrator.
In October 2012, Mr Pollet’s independent financial advisor, Square Mile Asset Management, (the “IFA”) emailed OCL stating that it had been instructed by Mr Pollet to investigate his pension options and later in October, in response to information provided by OCL, it emailed again explaining that Mr Pollet wished to transfer his benefits and asked what actions were needed to allow the transaction. OCL in reply informed the IFA that it was confirming the requirements with its pension lawyer.
In early March 2013, OCL emailed Mr Pollet attaching bank statements for his holdings in the Plan and a transfer discharge form to be completed and returned. This was signed by both Mr Pollet and Legal & General (Mr Pollet’s SIPP provider) in July and returned to OCL along with a copy of the application form Mr Pollet had completed for the SIPP and a request for the transfer payment to be made. Later in September, Mr Lestang, a Director of OCL, wrote to Mr Pollet blaming Tudor for the delay, stating that Tudor had failed to comply with OCL’s request that it action the transfer and that while OCL was prepared to act unilaterally, if it did action the transfer this could amount to a breach of trust or maladministration. OCL therefore asked Mr Pollet to sign a declaration containing various disclaimers including that he wished OCL to act unilaterally, that he would take no action against OCL in connection with the transfer and that he would pay any tax charge penalty or any other liability that OCL might incur.
Mr Pollet refused to sign the declaration and took his complaint to the Ombudsman.
The Ombudsman first looked at the right to transfer under the Plan’s rules and noted that while there was no automatic right to transfer, there was no proviso purporting to provide decision making discretion on the trustee or administrator and so in the absence of this, a transfer would be mandatory on request (provided that the receiving scheme was a registered pension scheme).
In addition, it was not disputed that Mr Pollet had a statutory right under the Pensions Schemes Act 1993 to transfer the cash equivalent of his benefits to another registered pension scheme, in any event.
The Ombudsman further noted the general statutory requirement, that trustees of a money purchase scheme must process a transfer within 6 months of the date of its request.
In his findings, the Ombudsman said that it appeared that Tudor had been removed as a trustee and as scheme administrator before Mr Pollet’s transfer request so this should not have contributed to the delay.
In relation to the disclaimer, the Ombudsman held that while OCL was entitled to use its standard disclaimer it had no right to request the further disclaimer excluding further liability against OCL because it was an attempt to ‘settle’ any potential claims against them in respect of anything they may have done in return for something they had no legal right to refuse. Mr Pollet’s complaint was consequently upheld against OCL, with the Ombudsman commenting that one month from when Legal & General sent the completed discharge form would have been a reasonable time to disinvest Mr Pollet’s holdings and make payment to Legal & General.
While the Ombudsman held that one month from the date the completed discharge form was sent was a reasonable time to complete the transfer, this is fact specific and caution should be taken in applying this reasoning to any other transfer request. It seems one month was a reasonable amount of time here as OCL had the power to process the transfer and did not, instead blaming Tudor for the delay. Therefore the general statutory requirement that a transfer must be processed within 6 months of the date of its request is still applicable, but must be considered in the context of the case.