Pensions Ombudsman finds Hartley maladministered fund

The Pensions Ombudsman concluded the conduct of Hartley Pensions, which fell into administration and was hit with enforcement action by the Financial Conduct Authority, amounted to maladministration after it was found to have withdrawn money from the client’s account to pay itself and a financial advisor the client had no relationship with.

The Ombudsman also found that the client, Mr T, had suffered severe distress and inconvenience owing to the company’s behaviour – although warned that recompense would be limited owing to Hartley still being in administration.

Simon Laight, a pensions expert with Pinsent Masons, said the determination underlined the rigorous approach taken by the Pensions Ombudsman in such cases.

The determination came after Mr T’s self-invested personal pension (SIPP) was transferred to Hartley following the previous administrators themselves going into administration in 2018.

Hartley then deducted £1,536.47 from the plan bank account; more than £967 of which was then paid to a financial adviser who had no relationship with Mr T, and the rest retained by Hartley. Despite his financial adviser contacting the pension administrator for an explanation and immediate refund, it took nearly six months for them to do so. Similar fees were deducted again two years later, before being refunded.

In March 2019, Mr T also applied to take a pension commencement lump sum of £22,000 from the plan, which he wanted to receive by 15 May 2019, but Hartley did not pay it until June of that year.

The Ombudsman agreed with the Adjudicator’s finding that Hartley’s failure to provide a satisfactory level of customer service - and a subsequent failure to engage with the Pensions Ombudsman’s investigation - amounted to maladministration and had caused serious distress to the client. The Ombudsman ordered Hartley to formally apologise to Mr T for its failings.

It also partly upheld a complaint over the agreed annual management charge (AMC) after Hartley and Mr T entered into a new AMC agreement in 2021. However, Hartley did not adhere to the new terms, continuing to bill Mr T for a higher rate than agreed.

Although Hartley may have intended to refund any over-charged AMC to the plan immediately, the Ombudsman found this posed an unnecessary and unreasonable risk to Mr T given the company was in administration.

The Ombudsman did not uphold a complaint about failing to transfer the value of the SIPP to another provider. This was deemed impossible because one the of the plan’s investments, the ABC bond, was illiquid. The Financial Services Compensation Scheme eventually stepped in and compensated Mr T in full for the loss of the value of the ABC bond, but the pension plan had been impaired as a result.

Following Hartley being placed into administration, the transfer was assigned the lowest priority even though Mr T’s transfer wishes predated when Harley went into administration.

The Ombudsman found that as the client had not made a formal request to transfer, there was no basis to find that Hartley acted unfairly or unlawfully.

But it concluded overall that the numerous instances of maladministration by Hartley amounted to a severe instance of distress and inconvenience caused to Mr T and ordered that an award for distress and inconvenience (‘D&I award’) of £2,000 be paid.

Charlotte Scholes, a pension litigation expert with Pinsent Masons, added: “The D&I award highlights the severity of the case, and the added complications that the company’s financial status could create, which underlines the sensible approach the Ombudsman takes in dispute resolution.”