The Ombudsman has rejected two complaints against schemes that made transfers to a scheme which turned out to be a pension liberation vehicle. 

The Ombudsman rejected the complaints on the grounds that the transfers complied with accepted standards at the time (Mr S PO-29578 and Mr R PO-28951).

Both transfers took place in 2016 and were made to the Optimum Retirement Benefits Plan ("Optimum Plan").  The Optimum Plan was registered with HMRC as an occupational pension scheme.  It was administered by Optimum Financial Solutions Limited ("Optimum") which was regulated by the FCA.  In February 2018, Optimum was wound up by the High Court.  It subsequently emerged that the trustee had used the Optimum Plan assets to make high risk investments which were now worthless. 

In Mr S's case, the provider of the transferring scheme had:

• checked the FCA register and ascertained that Optimum was regulated by the FCA;
• checked whether the Optimum Plan was on its internal list of high risk schemes and found that it wasn't; and
• checked that the Optimum Plan had been established for more than 12 months.

The Ombudsman noted that the Pensions Regulator's "Scorpion" leaflet identified the following as warning signs of possible pensions liberation:

• receiving scheme not registered or only newly registered with HMRC;
• member attempting to access a pension before age 55;
• member pressuring the trustees/administrators to carry out the transfer quickly;
• member approached unsolicited;
• member informed that there was a legal loophole;
• receiving scheme previously unknown to the provider, but now involved in more than one transfer request.

The Ombudsman concluded that there had been no reason for the transferring scheme provider to conclude that any of these flags were present.  He also noted that Mr S had a statutory right to a cash equivalent transfer value.  Taking these factors into account, the Ombudsman did not uphold the complaint.

The circumstances of Mr R's case were similar to those of Mr S, and the Ombudsman did not uphold the complaint.  One issue raised in Mr R's case was that, although Optimum was regulated by the FCA, its FCA permissions did not cover advice on pension transfers.  However, the Ombudsman concluded that the fact that Optimum was FCA-registered at all would have given the transferring scheme's provider some comfort that Optimum would behave in a professional manner.  He concluded that the transferring scheme's provider was not under an obligation to do more than carry out a basic check that Optimum appeared on the FCA's register. 

Our thoughts

These determinations show that when dealing with complaints about past transfers, the Ombudsman's approach is to judge them by reference to accepted standards at the time.  However, outcome of this case contrasts starkly with that in PO-26616, a case involving a transfer from the Teachers' Pension Scheme (TPS) in which the member's complaint was upheld.  Two key differences appear to have been (a) the fact that in the TPS case the time limit for requesting a transfer value had expired, and (b) that in this case the scheme was being administered by an FCA-regulated entity.

Under the current transfer values regime in force since 30 November 2021, trustees are generally required to request evidence of an "employment link" before making a transfer to an occupational pension scheme.  Inability to satisfy the employment link requirement is an "amber flag", meaning that the member must receive scams guidance from MaPS in order for the transfer to proceed.  Had the current regime been in force in 2016, it appears that neither Mr S nor Mr R would have been permitted to transfer without first receiving scams guidance, as neither would have been able to provide the required evidence of an employment link.