Pensions disputes: members must take some responsibility for change requests

The PO dismissed a complaint brought by a Mr R, who claimed that he had been offered inadequate compensation from his provider for an error made during a transfer. The error had, he said, caused an investment loss.

The ombudsman’s determination in the dispute also confirms that redress aims to put individuals back in the financial position they would have been had the correct action been taken.

On 14 March 2020, Mr R submitted a request for the funds held in one of his accounts to be transferred to his second account with the provider. Mr R also asked for the paperwork which would enable him to make a top-up contribution before the end of the 2019-20 tax year. The provider confirmed the transfer on 30 March, but failed to reply to Mr R’s request about a top-up contribution.

Mr R complained that the missed opportunity to make a payment into the plan had put him at a financial disadvantage. The provider upheld his complaint and offered £450 in recognition of the inconvenience and disadvantage Mr R had been caused. However, Mr R was unhappy with the offer. Responding in June 2020, he said that he had made similar contributions in the previous years which should have demonstrated his intention to make this particular contribution too. He said that he had not chased his initial request given the impact of the Covid-19 pandemic and other personal circumstances.

The provider increased its previous offer to £750, and committed to investigating whether the delay in sending paperwork for the top-up contribution had led to an investment loss for Mr R. It requested proof of Mr R’s taxable income to consider the tax implications.

In July 2020, Mr R replied that the offer of £750 was inadequate. He felt it was unreasonable that the provider wanted him to make the top-up contribution before it would consider any investment loss he might have suffered. He said that the money for this contribution was no longer available as he had made a payment to reduce the outstanding balance on his mortgage. The provider stated that its proposal of redress for potential investment loss was contingent on the top-up contribution being made, as otherwise it would be unable to calculate the loss or assess the relevant tax consequences.

Dismissing Mr R’s complaint, the PO said that he was satisfied that the provider’s offer of £750 for distress and inconvenience was a reasonable outcome. The provider had given Mr R a reasonable opportunity to receive redress for any investment loss. He said that Mr R should have waited for the provider’s response on the redress he was seeking before using the money to reduce his mortgage balance, particularly as the provider had given an initial response before Mr R decided to make the mortgage payment.

Redress is aimed at putting an individual back into the financial position they would have been in had the correct action been taken – which, in this case, was contingent on the member making the top-up contribution. The PO considered that it would not be an appropriate method of redress for the member to have the benefit of the investment gain from the provider for a contribution which had not been made, while retaining those funds to use for another purpose.