Pension Ombudsman rejects SSAS member claim over maladministration and investment loss

A member trustee of a SSAS had brought a complaint of maladministration, negligence and investment loss against the independent trustee and administrator of a scheme, but his claim was dismissed (pdf, 16pp/2.1mb) after the ombudsman ruled that while the administrator had acknowledged some failings, they had not led to any investment loss.

The ombudsman said that during the process of the new administrators taking over running the trust, its member-trustees still could have given investment instructions to the previous administrator rather than waiting – which they claim led to the lost investment opportunities.

It also found no evidence of any definitive decision by the member trustees of investment plans during the time they claimed losses were incurred, highlighting the importance of ensuring that trustees give clear instructions, particularly regarding investments, to their advisers.

The case came after a member had appointed the independent trustee to take over administration of the scheme for him and his civil partner but delays in the handover process from their predecessors caused concerns over a loss of investment opportunities and other issues.

In late 2018 Mr M and his partner had brought in Empowered Pensions (EP) to administer their SSAS after feeling the previous independent administrators had been charging too much for their services. The following February, they submitted the paperwork for EP to take over the administration.

Issues over failed receipt of a revised deed of appointment, and around the non-UK residence and addresses of the member-trustees, caused delays to the opening of a new bank account for the scheme, and eventually, Mr M and his partner raised a complaint that November with EP over the delays - with Mr M doubting the company’s competence, expressing concern the pension scheme was effectively a training and development exercise for EP.

He claimed EP’s maladministration and poor case management had caused delays which resulted in significant investment opportunity costs to the scheme.

Once the new bank account was finally opened, EP said it was in a position to fully administer the scheme and looked to arrange an onboarding call with the member trustees, who instructed the firm to open an investment account for the scheme with Bestinvest.

In February 2020 around £25,000 was invested in the main portfolio, with the remainder of the balance in the new bank account being invested what was described as lower-risk investments – selected due to Covid-related market volatility at the time – which were retained until August 2020, when they were cashed in and the proceeds were reinvested.

EP accepted responsibility for failings in its administration, processes and staff training, but not other parts of the member-trustees’ complaint in relation to the loss of investment opportunity. The administrator refunded £2,100 in fees back to the scheme, but Mr M did not accept that this adequately compensated him and his partner for EP’s failings, leading to the complaint to the ombudsman.

However, the ombudsman did not find that EP’s maladministration led to any investment loss as Mr M and his partner could have given instructions to the previous administrator even while the takeover was progressing, rather than waiting until afterwards.

The ombudsman also rejected Mr M’s comment that one of the reasons a certain investment portfolio had not been implemented before EP took over trusteeship was due to the administrator’s statement in February 2019 that the transfer would complete by that April. He called this statement “aspirational” and said that it was unreasonable to rely on that timeline.

He also found no evidence of any definitive decision by the member trustees of investment plans during the time they claimed losses were incurred, highlighting the importance of ensuring that trustees give clear instructions, particularly regarding investments, to their advisers.

Case law cited by Mr M regarding loss of investment opportunities was not relevant, the ombudsman said, as unlike those cases, the assets remained within the same pension scheme and could be invested throughout the change of trustees

It also found that, as the compensation returned by EP was more than the maximum the ombudsman could award, there was no need to award further sums.

Pensions disputes expert Charlotte Scholes of Pinsent Masons said: “Ultimately, the determination reinforces a familiar theme in pensions disputes: clear instructions, properly recorded, remain critical. In their absence, even acknowledged administrative failings may not translate into recoverable losses”.