The Ombudsman has upheld a member's complaint and ordered Teachers' Pensions (TP) to reinstate the member's benefits in the Teachers Pension Scheme (TPS) after the member lost money having taken a transfer value to a scheme which invested in high risk unregulated assets (Mrs G PO-26616). 

The Ombudsman found that at the point when the transfer took place, the member did not have a statutory right to a cash equivalent transfer value (CETV), as the member's application to take the CETV had been made more than three months after the statutory deadline for doing so had expired.  However, the Ombudsman went on to hold that TP had failed to conduct sufficient due diligence and had failed to identify "clear red flags" regarding the transfer.

The Ombudsman referred to a previous determination (PO-12763) in which he had held that the reference in transfer values legislation to doing what is needed "to carry out what the member requires" means that a transferring scheme must carry out appropriate due diligence in order to benefit from the statutory discharge.  The Ombudsman noted that the transfer value request showed that the member was self-employed and lived in Cheshire whereas the scheme was an occupational pension scheme based in London.  The Ombudsman considered that the fact that the member was transferring from the TPS to an occupational pension scheme sponsored by a geographically distant company for whom she did not appear to work was a clear "red flag" which should have prompted TP to contact the member and carry out additional due diligence.

The transfer value request had been submitted in February 2015.  The Ombudsman's determination states that TP acknowledged that it was the Pensions Regulator's 2014 Action Pack that was the relevant guidance at the time of the member's transfer, not the Regulator's February 2013 guidance.  The Action Pack set out a number of common features of pension scams (eg individuals being approached via unsolicited calls).  It then stated, "If any of these features apply, then you can use the checklist on the next page to find out more about the receiving scheme and how the member came to make the request."  TP argued that none of the listed features were apparent and that it therefore had no reason to refer to the checklist.  However, the Ombudsman found that at least one of the features listed in the Action Pack applied, namely the transfer of money or investments overseas.  The Ombudsman said that if TP was unaware whether any of the features listed in the Action Pack applied, it should have confirmed this with the member.  The Ombudsman also noted that another pension provider from whom the member had requested a transfer to the same receiving scheme had refused to make the transfer and raised pension liberation concerns.

Our thoughts

The outcome in this case contrasts starkly with the outcome in the case of Mr N CAS-48914-L5F3 in which the complaint was not upheld.  In the present case the statutory deadline for exercising a right to a CETV had expired.  Had the different outcomes in the two cases rested on that aspect alone, this would be understandable.  However, it is not clear why this determination lays considerable emphasis on the Pensions Regulator's 2014 Action Pack being the relevant guidance when Mr N's case was considered by reference to the February 2013 guidance with no mention made of the 2014 Action Pack.