Pension Ombudsman finds remaining in SIPP amounted to consent to changes

The decision follows a complaint over some charges the provider applied to monies held by a scheme member as cash after his SIPP was transferred from another provider.

In 2015, the member’s SIPP was transferred from Aegon to James Hay following changes to Aegon’s legacy SIPP business.

In April 2017, James Hay wrote to the member to inform him about changes to the SIPP, which were due to take effect from 31 May 2017, including terms and conditions on what was being changed and new charges that were to be introduced.

The letter said the provider would also waive its standard transfer out charges if he chose to transfer out of the SIPP within 120 days. Any additional product charges incurred as a result of pricing changes would also be waived.

The member and the provider proceeded to exchange correspondence around the amended platform charge that had become applicable for cash balances. Although the provider notified the member that the charge had been applied correctly, in July 2020 he raised a complaint about the charges that had been applied to his credit balances in his current account each month from September 2017. He requested a refund, believing the charges to be "disproportionate"

The adjudicator concluded that no further action was required by the provider, but the complaint was referred to the PO for determination.

The PO dismissed the scheme member’s complaint, agreeing with the adjudicator’s findings that the provider had amended its fees and charges in May 2017 in accordance with its terms and conditions, thereby providing the member with adequate notice of the upcoming changes.

The PO also determined that by agreeing to remain in the SIPP from the outset, the member had effectively accepted and “become bound by the new charges and fees”.

The PO stated that SIPP fees and charges are “commercial decisions”, finding that James Hay had amended these in May 2017 in accordance with the SIPP’s terms and conditions.

The decision does, however, raise the question as to whether the same reasoning would apply to changes to terms and conditions that were deemed not similarly commercial in nature, and whether a member would be regarded as having accepted those changes simply by choosing to remain in the SIPP.

Although the member claimed he would have incurred costs by transferring to an alternative pension arrangement because of the type of assets he held within the SIPP, the PO determined that this was not ultimately the scheme provider’s responsibility. 

This determination will be significant both for consumers and SIPP operators. For consumers, it serves as a reminder that they should check any changes in terms and conditions carefully. This is particularly relevant where the member’s plan, as in this case, is transferred to a new provider as a result of a market exit.

The PO determined that the provider had given the member “adequate notice of the changes”. SIPP operators should review their terms and conditions to ensure they clearly state the minimum notice period within which consumers must respond to any proposed changes.

The decision also comes as the Financial Conduct Authority (FCA) recently concluded a consultation on proposals to strengthen oversight of SIPP operators. These include introducing clearer due diligence requirements for schemes that give investors ongoing choice and flexibility in their SIPP’s investments. Following the consultation, the FCA aims to publish a policy statement and final handbook text in early 2027